Many individuals believe that they are on a firm wicket with regards to their investments. The reason for this is not far to seek. Firstly, insurance has many options for confusing the individual. Secondly, Individuals do not have too much knowledge about insurance, which when combined with mis-selling leaves them even more confused.

Managing your insurance portfolio is a relatively very easy task. It is all about breaking the process down into simpler steps. Once you know about insurance strategies, you can select the right insurance policy for you. So, manage your insurance portfolio involves four steps:-

Identify your requirements
Like with shopping when a well-defined list helps you focus on the task at hand and avoid venturing into unrelated avenues, drawing up an insurance list can have the same effect. To avoid getting swayed by the plethora of insurance options, determine at the outset what you are looking for. Broadly, the insurance seeker can have one of two needs i.e. life cover through a term plan and investment combined with life cover through traditional endowment or a unit linked insurance plan. Although the latter sounds like the convenient option, we recommend against it. This option will deprive you of the benefits of selecting the two options i.e. insurance and investment in isolation. In other words selecting life cover or investment separately is more prudent than selecting a combination of both.

Quantify your needs
Once you have decided why you need insurance its time to answer the question – how much insurance do I need? Of course, the answer to this question will depend on whether you wish to opt for a life cover or an investment plan. The reason is because these two questions will have very different answers. To understand this better let’s take the first scenario i.e. you want a life cover. Typically this will involve planning for all future liabilities and commitments as also setting up a contingency fund. Those familiar with the jargon know that we are referring to the Human Life Value over here. On the other hand, if instead of a pure risk cover, you want to opt for an investment plan, then you will first have to identify the investment objective like retirement or child’s education for instance. Once you have done that, then you will have to quantify the investment amount to answer the question – how much money do I want to save for my retirement? Or how much money do I want to save for my child’s education?

Choose The Right insurance advisor
For choosing the right insurance policy, you should need the advice of perfect insurance advisor. Selling insurance as you are aware can be very remunerative. Not surprisingly, the advice is often biased in favor of insurance products that garner the highest commissions. So you have to be really sure that your insurance advisor is honest and competent. If you can not ascertain this easily, insist on references whenever possible. You should also check his recommendations by asking for comparisons across insurance companies over various parameters. You should understand why he is recommending one insurance plan again and again. And if he is making claims that seem peculiar to you, don’t hesitate to either take it down in writing from him or get a confirmation from a company official.

Another problem with insurance advisors is that many of them are mutual fund agents on the side. While, this by itself does not pose a problem, clients often complain of how their insurance advisor is at times not keen on selling life insurance and invariably makes a pitch for mutual funds. The solution to this problem lies in identifying your requirements. If you have decided to opt for a life cover for example, you should make sure your insurance advisor gets the point. If he still insists on selling other products then its time to evaluate whether he is the right insurance advisor for you. At times, having sold an insurance policy, the insurance advisor is no longer interested in servicing the same. References can play a critical role in weeding out such advisors.

Conduct a review regularly
Like all other long-term activities, you must monitor your insurance portfolio closely to ensure that you are on track to achieve your objectives. For instance, if you have opted for a life cover, then you will have to keep a close eye on your liabilities and financial commitments. If there is an apparent upward revision, then your existing life cover may not prove sufficient and you may have to consider taking additional cover. The solution to this problem is to select for a slightly higher cover at the outset; since pure risk plans are relatively cheap, it will not prove to be more expensive. If you have opted for an investment plan for your child’s education, for instance, then at periodic intervals e.g. annually ensure that your investment plan is on course to achieving the desired result. Again, if there is a discernible deviation, it’s time to re-evaluate your investment.

By concluding, we can say that managing your insurance portfolio is not as difficult as it appears. Like any other activity it involves taking decisions, implementing them and monitoring the results closely. Of course, your insurance advisor will play a key role over in selecting the right one.