Dos & Don’ts While Shopping for a Life Insurance Policy

July 21, 2021

An agreement between an insurance company and a policyholder wherein the insurer agrees to pay a pre-determined amount as benefits either on the unfortunate demise of the life insured or after a certain period of time in exchange of premiums paid by the policyholder. It’s unfortunate that Indian buyers despite having understanding the need of life insurance, always find difficulties in picking appropriate insurance policies for them. This is one of those areas of personal finance that people do not understand.

Basically, a life insurance policy is purchased keeping the insurance needs and the investment potential of the policyholder in mind. You, as an insurance buyer, need to be extra cautious while buying a life insurance policy because through this you want to provide financial protection to your loved-ones even after you’re not around.

Through this blog, I am making an effort to figure out the ways that would enable you to purchase best insurance policy. Here’s a short list of DOs and DON’Ts you need to follow while buying a life insurance policy.


  • You first need to analyse your insurance needs thoroughly, don’t imitate your neighbours blindly, you seek help of your finance adviser in order to calculate reasonable sum assured.
  • Make sure the agent, insurance company and the broker you are dealing with have granted license by the IRDAI.
  • Do extensive research over internet in order to compare different products and their offerings.
  • Review your policies, their sum assured on regular basis, and amend them, if your insurance needs and circumstances change.
  • Bring all your debts, liabilities and outstanding loans into consideration while analysing sum assured.
  • As a smart buyer, you should read the fine print carefully and also check for hidden costs.
  • Make payment by cheque as it would be a proof of your payment.
  • Always make payment in favour of the insurance company.
  • Buy policy online as it usually costs less.
  • Treat life insurance policy as a tool to provide financial protection, not for tax saving.
  • Fill up the proposal form personally, don’t leave it for the agent.
  • Before you sign the proposal form, discuss each and every point in order to make sure the information you furnished is correct. Doing this you will keep yourself away from any dispute at the time of claim.
  • Keep a copy of the completely filled and signed proposal form.

In case of Unit Linked Insurance Policies (ULIPs) ask for

Various charges, Switching of funds, Fund options, and Benefits, if Policy is discontinued, Policy is surrendered or Partial fund is withdrawn.


  • Don’t let agent or anyone else to fill proposal form.
  • Don’t sign a blank proposal form or leave any column blank.
  • Don’t buy policy with lesser cover just to make it cheaper. If the premium is unaffordable, buy it with a shorter term instead.
  • While filling up proposal form, don’t hide any facts such as your medical conditions.
  • Don’t let your policy get lapse as the policy does not provide cover during the grace/lapse period.

Check out this Articles: Know Why Term Plan is a “Must Have” Insurance Plan

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