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Create your own cover

An insurance policy consists of many components and an investor has to be careful about the features that are included and excluded in a particular policy, writes Arnav Pandya.

india Updated: Nov 22, 2007 21:24 IST

An insurance policy consists of many components and an investor has to be careful about the features that are included and excluded in a particular policy. With newer options available in the market an increasing number of investors are getting a greater say in what they want to include in their insurance policy. For this purpose they need to keep several things in mind.

The basic features

There will always be some basic features constituting the core of an insurance policy and these will be present for each policy that is chosen by an investor. This has to be considered as the starting point for the investor and then they have to build on the base. This will include a basic insurance cover and additional things that might be considered as essential by an insurance company. There will be little choice for the individual to choose in terms of basic features and they will have to start from this level.

Add on

This will be a crucial part as far as investors are concerned because it involves making choices for them. They will need to select what will constitute the additional features as far as their insurance cover is concerned depending upon the requirement of the individual. This is where a lot of differences will be visible and the individual will have to be careful in choosing the right options, which will determine the extent of the cover and the time period for which it would be available.

Premium

The premium that the investor ends up paying will also be based on the features selected by them when they have gone about the process of setting the insurance. This will finally determine the cost that has to be paid by the individual because every chosen feature will have its own cost that will be included in the premium that has to be paid.

Bringing it together

An individual's ability to use the available features and bring the choices presented together will be the key area in the entire working. This also means that such an exercise might not be an easy task for everyone and only those who have adequate knowledge and the ability to make decisions will be able to use this service in an effective manner. The rest would be better off if they chose policies that are already created and present in the market where so many decisions do not have to be made.

(The author is a certified financial planner)