Buying a life insurance policy without asking your advisor the right questions is as good as crossing a road blindfolded. Here are a few questions you MUST ask:
Don't buy from someone if the person is not able to prove that he/she is a qualified financial advisor.
Don't let your advisor push you for one product. Ask him/her to do a financial-need analysis (to understand the type and extent of insurance required) for you. Ask your advisor for all options available to help you meet your needs.
The amount of life insurance you need can be determined by carefully examining your current and future financial requirements.
Most of the insurance products offer a cover 10 times the annual premium you pay; however, you may still require more cover. Ask your advisor to assess the right amount of insurance cover for you.
Ask your advisor to explain the benefits of the plan with a company-provided benefit illustration.
Don't believe your advisor if he/she promises unrealistic returns to you. Check the product features in the company-provided brochure or company website, for guaranteed returns.
The amount of bonus declared on the policy is dependent on many factors. Ask your advisor about such factors and the guaranteed amount you will receive under the plan.
Check if the product you have selected has any investment risk. If yes, ask your advisor about the nature and type of risk before making a decision.
Understand the policy exclusions in detail. Remember to ask your advisor about all situations that could make you ineligible to get the benefit amount.
Ask your advisor what portion of the money you pay will be invested in the fund immediately. Check the allocation and other charges from the company-provided brochure or website.
If your advisor tells you that you need to pay one-time or for a limited period, confirm the same with the company-provided illustration or brochure.
You will be unable to withdraw money or may get a negligible value on your plan for a certain period of time. Ask your advisor on the duration for which you will not be able to access your investment.