What makes term insurance policy the most popular life insurance product is, the unmatched benefits it offers that too at a very marginal premium rate. However, in the process of purchasing the term insurance policy, the insurance buyers often get mislead and end up buying the wrong policy.
Making mistakes while purchasing like providing inaccurate information, not comparing the benefits, taking the cheapest cover, etc can result in the financial loss in the long-term. Thus, it is very important to be careful and avoid silly mistakes while purchasing a term insurance plan.
Read further to know more about the most common mistakes insurance buyers make while purchasing a term plan and how to avoid it.
Not Purchasing Sufficient Cover
The primary motive behind purchasing term insurance is to provide financial security to the family in case of any eventuality. However, if the coverage amount is inadequate then the funds offered by the policy will not last long. As per the rule of thump, the coverage amount of the term insurance plan should be at least 10 times the annual income of the policyholder. Thus, no matter whether you are purchasing term insurance from any other insurance provider make sure that you purchase an adequate coverage amount to safeguard the financial future of your family even in your absence.
Being healthy and young is inversely proportional to the importance of buying a term plan. Nevertheless, the most appropriate time to invest in a term plan is while being young and healthy. It is advisable not to delay the purchase of a term insurance policy because buying a policy at a young age not only decreases the premium rate but also provides higher coverage. Thus, with growing age, you can have adequate coverage at a minimal rate in times of emergencies.
This is another blunder that people often make while purchasing the term plan. Irrespective of the policy term you choose or the coverage amount, make sure that you make full and true disclosure of information on the application of term insurance plan. For example- if an individual buys a 5-year policy and assumes that his any negative health condition is not likely to manifest in such a short span of time. However, if something goes wrong and the cause of death is due to the health factor, which is not disclosed in the application, then the insurance company may reject the claim filed and nullify the policy. Thus, the beneficiary will be left with nothing.
Sometimes insurance providers incorporate many riders option into a term insurance policy. These add-on riders can make a remunerative term plan too expensive without even offering the required benefit in return. Thus, it is very important to check the benefits offered by the riders before adding it to the policy and also check whether you actually need it or not. For example- you can avail critical illness cover is a more economical way rather than having it as a rider in your term policy.
Ruling out the option of E-Insurance
People are so much into the habit of purchasing policy in a traditional way that they often avoid option for the e-insurance method to purchase the policy. However, nowadays online insurance is gaining huge popularity and has become a lucrative option to save effort, time, and money. With the help of a reliable IRDA approved insurance web aggregator website, you can choose an appropriate plan as per your own choice. Ignoring the option of e-insurance is another mistake that buyers usually make.
Not Comparing the Plans Online
This is one of the major mistakes that insurance buyers do while purchasing term insurance by insurers However, comparing the quotes online should be a must-do task while purchasing the policy. By comparing various policy quotes you can choose the plan as per your suitability and requirement, which offers maximum coverage at a minimum premium rate. Moreover, you can seek assistance from customer support to choose the best term insurance plan.
Treating Insurance as an Investment
Even though it is true that term insurance offers tax benefits, limiting it to investment is the most common misinterpretation that most of the policy buyers make. You can think that a pure term insurance plan is a waste of most as it does not provide any survival benefit. But you must not forget that above anything else insurance is a protection product. Some term plans like TROP can offers survival benefit as the return of premium, the main objective of purchasing insurance is to ensure financial protection to your loved ones in your absence.
By reading this, you must have now understood the mistakes that should avoid while purchasing the policy. You can now make a smart choice while buying the best term insurance plan in India and can create an asset for your family in the long-term.