How to get out of a horrific insurance

A life insurance policy is a key component of a financial plan. Chosen well, it safeguards the financial outlook of a family if the breadwinner passes away. If, however, it is bought for the incorrect reasons, the same policy can become a consume on resources and prevents the policyholder from meeting crucial financial goals.

Bangalore-based marketing manager Jitendranath Patri is paying a premium of Rs 1.06 lakh a year for six policies that give him a combined cover of Rs 20.4 lakh. ?I feel I have over invested in insurance. These plans take up a huge chunk of my savings. I must resort to some course correction here,? he says.

In Kolkata, Meraj Mubarki is agonising over his inability to save sufficient for his dream house. ?I?m in a financial mess. My insurance policies take up too much of my savings, leaving me with very little for my house,? says the 33-year-old college professor. Worse, it leaves this sole breadwinner grossly underinsured.

Mubarki is covered for Rs 6.75 lakh, though he needs an insurance of at least Rs 60 lakh. In Mumbai, software professional Amit Kolambkar is thoroughly miffed with the returns from his Ulips and feels cheated. ?The agent didn?t explain how the plan works and how I can decide my allocation to equity,? he says.

Getting stuck with an unsuitable insurance policy is a malady as widespread as the common cold. There?s one wrong insurance policy in almost every household. A few buyers such as Patri and Mubarki realise their mistake, but most policyholders don?t. You can, however, find out whether your insurance policy suits your needs. Many like Kolambkar blame the agents for their predicament. ?Very few investors spend time on understanding their policies and features,? says Mark Meehan, COO, Bharti AXA Life Insurance . ?It is important to buy the right plan that suits your need,? adds Nageswara Rao, MD & CEO of IDBI Federal Life .

Source: [Economic Times]