Nithin Kamath of Zerodha recommends if you start your personal finance journey

Nithin Kamath, CEO of online brokerage platform Zerodha, emphasized in a social media post on Platform X that buying life insurance and health insurance is essential for anyone starting with their personal finance journey.

“The first thing you should do when you start your personal finance journey is to make sure you have enough life and health insurance. If you have a dependent, it’s a bad idea to not have life insurance,” Nithin Kamath said in a March 11 post.

Kamas also pointed out that after interacting with people, he found that one of the biggest factors for people who don’t buy insurance is the policy and hidden terms.

“Then there is the fact that insurance companies keep changing things. For example, I don’t know that the coverage rules are getting harder and rejected,” Camas said in a post on X.

7 Things to Know Before Purchasing Insurance

Nithin Kamath also shared a Zerodha blog highlighting seven key factors to know before buying a term insurance policy.

1. Choose the right insurance provider: People should consider choosing the right insurance provider before choosing a term insurance policy. Zerodha blog also mentioned that some companies offer great value to their policies, while others continue to their basic offers and products.

To choose a company, people need to check if the company has a claim settlement rate of 97% or higher ₹According to the report, 50 million are annually.

2. Advantages of Hazardous Diseases: The benefits of severe illness are a key aspect of any insurance policy. After the Insurance Regulatory Development Agency of India (IRDAI) announced that the premiums of these services will not change over time, many insurers have changed their benefits.

“So, most major insurers now offer these benefits for a limited number of years rather than a full policy term, which is a major drawback. In some cases, prices have also risen slightly,” the Zerodha blog says.

3. Claim Guarantee Function: According to the report, only one insurance company offers a term insurance policy that includes a claim guarantee feature for specific qualified customers with a certain amount of coverage. This feature will result in higher-level policies than other policies.

If you have any pre-existing health conditions, the insurance company may deny your application for this policy. Upon approval, the program will be eligible for claim expenses in any case.

4. Instant claim expenses: When people want to buy a term insurance policy, instant claim spending is a good aspect as they reduce the challenge of claiming “long waiting time”.

According to the blog, citing the same data above, people who claim insurance in the first three years of purchase wait for a long time and the claim takes more than three months to clear. However, waiting time is a reason to ensure there is no insurance fraud in the claim.

Claims after three years are usually faster than “within one to two weeks after submitting the required documents”.

Instant claim expenses are an option of initial amounts granted to the client to help maintain the waiting period before full processing or claiming.

5. Insurance rules: An insurer’s underwriting process is like analyzing someone’s health records and testing them through a medical questionnaire to assess a person’s overall health.

“Insurers are becoming increasingly cautious while underwriting term insurance policies,” Zerodha blog post said.

The broker also cites the data above and says they see policy rejections, a deeper investigation and an increase in quotes on premiums that either increase the amount of paid premiums or reduce the value of overall coverage.

“We believe this trend will continue until 2025,” insurance distribution platform Ditto said.

6. Zero-cost terminology strategy: In the wake of the global Covid-19 pandemic, people who want to buy term insurance policies tend to be attracted by zero-cost term insurance policies.

A zero-cost term policy is an insurance policy in which people pay premiums regularly, and if the holder surrenders the policy within a specific window before its original expiration date, the insurer will refund all premiums, making it a zero-cost fee.

However, these policies come with strict guidelines such as buyingers are too young and choosing long term longer than usually recommended.

7. MWP Law: The Married Women’s Property (MWP) bill has also attracted a lot of attention due to awareness programs involving term insurance, the report said.

This is a guarantee for married women and assists men in protecting their wives and children in case the lender may claim assets after their husband dies.

Section 6 of the MWP Act assists men in protecting their wives and children by designating them as beneficiaries of their financial interests. Section 5 of the MWP Act helps married women access life insurance plans and have complete control over financial benefits.

Note: This story is for informational purposes only. Talk to a certified insurance consultant before making any investment-related decisions.