Insurance awareness among individuals is very low, which when combined with mis-selling leaves them even more confused. Broadly, to manage your insurance portfolio involves four steps.
Identify your needs.
Like with shopping when a well-defined list helps you focus on the task at hand and avoid venturing into unrelated avenues, drawing up an insurance list can have the same effect. To avoid getting swayed by various insurance options, determine at the output what you are looking for.
Broadly, the insurance seeker can have one of two needs a) life cover (through a term plan) or b) investment combined with life cover (through traditional endowment or a unit linked insurance plan).
How much you need?
Once you have decided why you need insurance its time to answer the question – how much insurance do I need? Of course, the answer to this question will depend on whether you wish to opt for a life cover or an investment plan like retirement or child’s education . Once you have done that, then you will have to quantify the investment amount to answer the question – how much money do I want to insure and invest. ?
Select the insurance adviser .
One reason why insurance has turned out to be more complicated than necessary is because of the quality of insurance advice. . So you have to be really sure that your insurance adviser is honest. If you have decided to opt for a life cover for instance, make sure your insurance adviser gets the point. If he still insists on selling other products then its time to re-evaluate whether he is the right insurance adviser for you.
Conduct a review regularly
Like all other long-term activities, you must monitor your insurance portfolio closely to ensure that you are on track to achieve your objectives. For instance, if you have opted for a life cover (in line with your Human Life Value), then you will have to keep a close eye on your liabilities and financial commitments. If you have opted for an investment plan for your child’s education for instance, then at periodic intervals (eg. annually) ensure that your investment plan is on course to achieving the desired result.
If there is a discernible deviation, it’s time to re-evaluate your investment.
your insurance adviser will play a key role over here, which is why it’s important to ensure that he is honest and competent.
Manage your insurance and live peacefully.