Mumbai: A term life insurance plan is a type of life insurance that provides financial protection to the policyholder’s nominee or family in case of his or her unfortunate death. Term life insurance provides financial security and hence, it is important to select the correct plan to maximize benefits from your insurance policy.
However, do you know people make numerous blunders while purchasing a term plan? Some of the most common mistakes buyers make when purchasing life insurance include providing false information, choosing cheaper coverage, and failing to compare benefits and claim settlement ratio of different insurance companies. All these mistakes and more will be discussed in this article so you to know beforehand what you should not be doing before buying the term plan.
1. Buying a short-term plan: Purchasing a term life insurance plan is a sensible move. To maximize your benefits, your term plan must cover your maximum age. Shorter-term plans may have low costs, but if you renew them later, the premiums increase dramatically. Moreover, a short-term insurance plan may prove ineffective in an emergency.
2. Insufficient sum assured: A term life insurance is acquired to ensure financial security for your family in your absence. The Sum assured you select should be narrowed down based on your present financial situation, as well as your children’s lifestyle and educational needs. If you are the breadwinner in the family and do not choose the appropriate coverage amount, your family may struggle to maintain their current lifestyle. The small sum assured may not last long unless your family establishes a source of regular income or supports your child’s schooling.
3. Delaying the purchase of a term plan: The earlier you buy insurance, the more coverage you get at a reasonable premium. When you are young and have a steady income, it is great to purchase a term life insurance policy due to the fact the same policy will protect your family against unforeseen events in your life.
4. Selecting the first choice without researching: Before purchasing an insurance policy, you have to do a thorough study to determine the appropriate sum assured and which insurance company you are selecting for the same. To get the most out of your term life insurance plan, thoroughly review it and purchase additional coverage as needed. Do not always accept the first plan that comes your way. Make an informed decision after conducting thorough research on the basis of the premium charged, compare the claim settlement ratio, and any other terms and conditions if they are levying.
5. Preferring cost over coverage: Aside from death benefits, a term insurance plan typically covers critical circumstances. Choosing the suitable plan could provide you with the correct sum assured and affordable rates. The cheapest term life insurance plan may not provide all of the benefits of a term plan. Thus, an affordable plan with a few add-ons will give you adequate coverage. However, make sure the claim settlement ratio of a particular company is on the higher side because at the time when your family makes the claim, what matters is how quickly it is getting settled.
6. Providing inaccurate information: To get the most out of your term insurance coverage, you must submit accurate information when getting it. If you withhold a sickness or other facts from your insurer, you may be denied coverage in the future. It is always advisable to provide accurate information in order to avoid misleading your insurer and yourself, even throughout the insurance renewal process.
7. Choosing excessive riders or no riders at all: Add-ons are usually helpful in getting the most out of a term insurance plan. Too many of them may result in higher premiums that may become unreasonable in the future. Purchase add-ons that you may otherwise require, or exclude them from your coverage to keep it inexpensive.
8. Not looking at online alternatives: Purchasing a term insurance plan online provides various advantages, like offers, quick process, will be able to compare claim settlement ratio, and similar. Choosing to buy the policy offline might lead to more paperwork and delays in the process
9. Shifting without hesitation: People often realize that their existing plan is not working for them and switch to a new term plan that provides various additional benefits at a high cost. But what you don’t realize it is you may be uninsured during the time between acquiring a new policy and terminating your previous one. You should think twice before changing your plans or considering adjusting your current policy to make it more effective.
10. Not researching the plan: The coverage, terms and conditions, and everything else must be thoroughly reviewed to have a fair understanding of what you are acquiring and how the policy process works. Do some research before purchasing term insurance in India, and read the plan thoroughly to get the most out of it.
So, we are saying,
Term insurance coverage provides financial security and peace of mind. Purchase the term insurance policy after a thorough analysis of your financial situation. Avoid common blunders as mentioned above and make the correct decision. Take into consideration the claim settlement process of an insurance company, how transparent the company is, its customer support, type of policies they are offering. Also, as your life progresses, check your coverage to ensure that it continues to meet your family’s increased or reduced financial needs.
