One-minute guide to understanding life insurance policy1 min read . Updated: 21 Dec 2009, 09:13 PM IST
One-minute guide to understanding life insurance policy
What am I?
You can see, touch, feel, smell or hear any product you buy—be it a television, a property or a bottle of perfume. However, you can do none of the above with financial products. I am the legal document that makes these tangible. I record your handshake with the insurer to entitle you to a compensation against a pre-specified fatal mishap. I also record the amount you agree to pay to the insurer and the compensation sum.
Why am I important?
I tell you what the insurer agrees to offer and under what circumstances. You need to know me properly before accepting me. I usually run into several pages. You may need to call your accountant and lawyer to fully understand me as I am confusing at times. Leave me unread at your own risk.
Little known thing about me
If you find me problematic after my arrival, you can reconsider keeping me. You can return me within 15 days of taking me at no cost.
Where should you keep me
Ideally, you should keep me in a locker with a copy at home. If I am damaged or destroyed, you will have to do a lot of running around to get my clone. Ensure your heirs know about my whereabouts.