Globally, Indian consumers are known to be smart buyers often called value seekers by marketers.
Indians are always looking for the best deal and to maximise perceived price-value output. Purchase is preceded by a detailed understanding of the products functionality, durability, features, performance rating, warranty, fit, colour and customisation. This behaviour is true for almost all product categories and across socio-economic segments.
However, one critical category where Indians tend to falter, though, is insurance.
The average ticket size of a regular life insurance policy is Rs 20,000, the premium for which is payable every year through the policy term averaging 12 years. The purchase of a policy is often not as well thought as when, say, a 35-year-old buys a shirt that costs one-tenth that of the annual average insurance premium. The time and effort invested for both purchases is lopsided.
All I want to know is where I should sign on the proposal form, is a common response when it comes to insurance. The realisation dawns a few years down the line when policy-holders understand that they have made the wrong choice.
For instance, by casually opting for regular premium, the policy-holder may have mistaken the product to be a single-premium plan.
On its part, the life insurance industry has done a commendable job of educating and sensitising people about the need for adequate cover, planning for children’s future or saving enough for a post-retirement life.
However, customers continue to live in a state of inertia that eventually leads o dissatisfaction, grievances, high surrender rates and policy lapse. So, what are the basics that you should look for before buying a policy? To begin with, check if the plan covers you well and meets your long-term financial goals. Understand the product type if it’s market-linked, be aware of the risk.
Be very clear about something as basic as a single-premium or regular premium. Check the payment terms and premium amount, taking into account changing income and goals.
My professor, whose classes had the best-quality participation, always said that the only stupid question is the one you don’t ask. When you plan a life insurance purchase, ask your agent or bank for all possible details. Read the brochure. Filling up the basic details by yourself is a matter of minutes but can save you a lot of trouble later. Check the lock-in period, surrender charges and maturity benefits after and during the term, before signing the proposal form.
While the insurance industry is improving transparency and disclosures, and beefing up training of distributors and customer education, customers too need to take the initiative to understand the products better as they do in other categories. Don’t just save big, save smart.
Author is head of brand and cross sell, SBI Life
http://www.financialexpress.com/news/look-who-is-afraid-of-insurance-products-/1042747/2
