There’s no denying that the world is full of uncertainties, making a life insurance plan incredibly important in every individual’s life.
It’s no secret that life insurance ensures the financial stability and overall well-being of your family when you aren’t there for them. And this is where the importance of a term insurance comes into play!
For those who don’t know, a term plan is a type of life insurance cover, where the family of the policyholder gets financial protection upon his sudden death. Sadly, no maturity benefits are offered under term insurance (apart from the TROP plan).
Since the market is flooded with a multitude of options, choosing the best term plan could be potentially daunting.
In this post, we’ll discuss some of the common mistakes that people make while buying a term insurance plan.
1. Insufficient Term Insurance Cover: It has been observed that many people tend to miscalculate their needs and consequently, end up choosing a low cover.
When you choose a term insurance plan, you must consider a cover that is at least 8 to 10 times your annual income. Also, ensure your cover can be exceeded if your family may require more funds.
2. Shorter Policy Term: This is one of the most common mistakes that people make while choosing a term plan.
Insurance with a shorter policy term may let you make a wrong decision. If you choose a term plan for 20 years at the age of 25, it will cover you till 45 years of age.
So, make sure you avoid choosing a shorter policy term and consider opting for an adequate one. You need to choose the best term plan that may cover you till the age of retirement.
3. Choosing the First Option: Before buying a term policy, you must conduct proper research to choose the right sum assured and an affordable premium.
If you want to make the most out of your term plan, make sure you study the plan carefully and select additional coverage. Make sure you do not always choose the first plan that comes to your path instantly.
4. Not Disclosing Correct Medical Information: If you think not disclosing your health condition may let you save a significant amount on premium, then you’re probably wrong!
Although you may need to pay a lower premium first, if you are caught lying, the insurance company has the right to refuse the claim. And this could not be an ideal solution for your family and can affect them. When you’re choosing the best term insurance plan, make sure you tell all the details related to your health to the insurance provider.
5. Choosing Excessive Riders: If you want to make the most out of the policy, add-ons are always useful.
An unnecessary number may result in a higher premium, which you might not need in the future. If you want, then only you should purchase add-ons, otherwise, leave them. This will make your policy more affordable.
6. Always Consider Insurance as an Investment: Most people believe that a basic term insurance plan might break their bank.
But you must not forget that insurance is a protection tool that every individual needs at some point in their life. The main reason to buy term insurance is to provide the best financial security to your family.
7. Delaying the Purchase Decision: Another mistake that most people make is to delay their decision and wait.
This is something that you must avoid!
When you are in the prime of your life, make sure of your term insurance without thinking twice. Along with financial protection, you will also get the benefit of lower premiums. If you apply at a later age, it could break your bank.
8. Thinking of the Future: When it comes to saving an amount on premium, many individuals choose a lower sum assured.
Make sure you choose the term insurance that can cover at least 8 to 10 times your annual income. It is recommended to review the financial needs of your family, lifestyle, and age of each member for adequate coverage.
9. Choosing a Plan based on Money: Another common mistake that people make is by choosing a term insurance plan, which is inexpensive. You’ll save money there, but the company may have a bad CSR or the plan may not be useful at all.
Before buying a plan, the level of customer service and claim settlement ratio of the company must be considered along with the plan benefits that can meet your needs.
10. Not Buying Online: There’s no denying the fact that online term insurance plans are quite affordable as compared to regular plans. Why? Because no middle man is involved.
In fact, you can easily compare term insurance plans online and make an informed decision.
It couldn’t be wrong to say that a term insurance plan offers great financial stability to your family when you aren’t physically present to take care of their needs