Buying Health, Life Or Term Insurance? 5 Checks You Should Never Skip

Insurance is one of those purchases most people make hoping they never have to use it. But that does not mean you can buy a policy casually.

A low premium may look attractive. A long list of features may sound impressive. But what really matters is whether the policy will protect you when you or your family actually need it.

India's insurance market is growing rapidly. Yet there is still a large gap between owning a policy and having enough protection. Insurance penetration stood at around 3.7 per cent of GDP in FY2024-25, while insurance density was about $97. The industry collected nearly Rs 11.93 lakh crore in premiums during the year.

For consumers, the challenge is to choose the right cover? Shreyans Vijay, Executive Director, Sales, Coverfox Group, says the focus needs to move beyond simply comparing premiums.

Here are five things to check before buying health, life or term insurance.

1. Don't look at the premium alone. Check the cover

The cheapest policy is not necessarily the best policy. The first question should be: Is the cover enough for me and my family?

For term insurance, this means looking at your income, outstanding loans, dependants and future financial needs before deciding the sum assured. For health insurance, it means asking whether the cover will be enough to handle a major hospitalisation in the future.

According to Shreyans Vijay, consumers need to move from a price-led approach to a needs-based approach when selecting insurance. A policy that costs less but leaves you badly underinsured can prove far more expensive when a crisis hits.

2. Read the exclusions and waiting periods

This is where many buyers make a mistake. They look at what the policy covers. They don't spend enough time checking what it does not cover.

In health insurance, pay close attention to pre-existing disease waiting periods, disease-specific exclusions, co-payments, room-rent limits and sub-limits. These details can have a direct impact on the amount you eventually receive during a claim.

General and health insurers reportedly settled 3.26 crore health claims in FY2024-25 and paid around Rs 94,248 crore. About 58 per cent of these claims were settled through cashless mode.

Shreyans Vijay of Coverfox Group says customers need to understand these conditions before buying rather than discovering them when they file a claim. In simple terms, don't just ask, "What does this policy cover?" Ask, "When will this policy not pay?"

3. Look beyond the headline features

Insurance policies are often sold through attractive numbers and features. But the fine print matters more.

Before buying, compare the policy's coverage, exclusions, renewal terms, claim servicing and flexibility. Don't automatically choose the policy with the lowest premium.

Service quality is also important. Insurance-related complaints rose to 2,57,790 in FY2024-25 from 2,15,569 in FY2023-24. Claim disposal emerged as the biggest category of complaints.

As Shreyans Vijay, points out, consumers should evaluate the policy as a whole rather than reducing the decision to a premium comparison. A policy is ultimately useful only when it works when you need it.

4. Don't mix insurance with investment

Insurance and investments serve different purposes. Insurance is primarily about protection. Investments are meant to create wealth. Before buying, ask yourself what problem you are trying to solve.

Do you need financial protection for your family? Then focus on adequate life or term cover. Do you need money for retirement or other goals? That's where investments such as mutual funds, SIPs and equities may come into the picture, depending on your risk profile.

There is also an interesting shift happening in India's life insurance market. The industry issued around 2.7 crore new policies in FY2024-25, down from about 2.9 crore a year earlier. Yet new-business premiums rose to nearly Rs 3.98 lakh crore.

For Shreyans Vijay, this underlines the need for better product suitability rather than simply chasing policy volumes.

5. Don't buy insurance once and forget about it

Your insurance needs can change dramatically over time. A person who is single at 25 may have very different financial responsibilities at 35. Marriage can change your needs. So can children, a home loan, a rise in income or responsibility for ageing parents.

Review your protection when your financial circumstances change. If your income has increased significantly, your existing term cover may no longer be enough. A new home loan can also increase the amount of protection your family needs.

Shreyans Vijay says the industry has an opportunity to move from one-time policy sales towards continuous customer engagement and periodic protection reviews.