Competition in the domestic insurance sector is heating up and premia are getting lowered aggressively. The major beneficiary in any competitive market is the customer, who gets a wider range of companies vying to service him.

A lot of companies venture into a particular business, insurance in this case, given the lucrative opportunity. However, some of these companies are invariably not competent enough to carry on the said business. This could be due to several factors like lack of competence, capital or even commitment. This results in substandard products and services and even closure.

So how do you go about selecting the right insurer for yourself? Below we highlight some points you should consider before you make the final call on your insurance policy.

Track record of the Parent Companies:
As any stock analyst will tell you, before you invest in a company, first check out credentials of the sponsoring company. Here prime importance needs to be given to the quality and integrity of the management. This holds true even in the case of an insurance company. With the insurance sector opening up, knowing the parent company becomes very important. While in stocks you have the option of exiting the company within days, insurance is a longer association with a minimum 10-year lock-in.

The foreign partner, if there is one, plays a critical role in the insurance venture because they are the ones who bring the expertise to the table. The domestic partner has little understanding of the insurance business and relies heavily on the foreign partner, to provide inputs in running the business successfully. So insurance seekers need to see the track record of the foreign partner in terms of settling claims (both death and maturity) and it’s international rating. They also need to see the foreign company’s bonus paying track record.

You also need to check the financial soundness of the partners and the quantum of money they are committing to the business.

Assessing the insurer’s fundamentals assumes a lot of importance before you purchase a policy.

Product range:
As insurance is a must for every aspect of life, every insurer should provide the products that cater to different life stages.

The main product categories are the savings plans (like endowment and money back), investment plans (single premium plans), pure risk cover (term policies) and pension and annuity plans. Within these products insurance-seekers need to see if there is flexibility and innovation in terms of riders and payment options. In terms of comprehensiveness, they should see if insurers have products targeted at different age groups like children, married couples and the retired.

This will ensure all your insurance needs are met by one company. This will eliminate the need to keep in touch with multiple agents of multiple companies.

To see how insurance can fulfill your needs at various stages of life, click here.

Service:
Life insurance is a very long commitment and therefore you need to associate yourself with a company, which will provide you the best possible service.

This should be a key-deciding factor for any individual before selecting an insurer. Service levels would include, quick processing of policy so you have the cover soon, smooth and prompt medical check-up, preferably near your home/office, regular updates and follow-ups for premia.

Price of the product:
In a price-sensitive country like India, pricing does play an important role. Any product should be charged in line with its value and function. However to simply choose an insurer because its product is available at a lower price may not be prudent. Insurance-seekers can compare products of two insurers, but they need to be careful that they are comparing apples with apples, as insurers bundle a lot of benefits with a policy in terms of riders and bonuses.

Selecting the right insurer is not simple as it looks. We have outlined a few criteria above, and its quite an elaborate process. Don’t buy insurance because your cousin is the agent, or because, you are getting 50% of your first year’s premium under the table. Rather evaluate the factors we have mentioned and then go with the insurer that best fits the profile.

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