Life insurance is one of the most effective ways to safeguard your loved ones’ future financially. Out of different insurance policies, a term plan is among the most cost-effective forms of life insurance. But, with so many options, buying the right plan can be a bit confusing. In this blog, we share with you some common mistakes that people make while buying a term plan.
- Taking Shorter Term Plan
It is one of the common mistakes that people make when buying a term plan. Short term insurance is not expensive, and they may attract you to make this mistake. For instance, if you buy a term insurance policy, for 20 years while you are 25, it will only cover up to the age of 45. Now, you will have to buy another insurance policy.
And you invest in a term plan at the age of 45; you will be paying higher premiums. Add this amount to your other financial responsibilities, and you might find yourself in a financially complicated situation. This is why you should select a long-term plan that is valuable and cost-effective for you.
- Inadequate Medical Information
Often to lower the premium, people do not disclose the correct health condition. But in case of your demise, the insurance company will track your health condition at the time that you bought the plan. And if they found something misleading, the insurance company holds the right to refuse the payment. This means that you will not be able to give the financial security that you were hoping to give your family.
- Inadequate Term Insurance Plan
The primary principle behind purchasing any insurance policy is to get the coverage that can cater to the needs of your dependent. Often people miscalculate their coverage requirement and end up with the lower cover. When choosing term plan coverage, select the cover, which is 8 to 10 times of your yearly include. You can take more coverage than this if you feel that in the future, your family member would need more money. But never go for anything below this limit.
- Delay in Purchasing the Term Plan
Most people tend to delay purchasing life insurance until they have a family to take care of. However, the more practical approach is to take your insurance at an early stage. The earlier you invest in a term plan, the lower will be your premium amount. This means that you will be able to get more coverage without having to burn a hole in your pocket.
- No Considering Online Term Plan
There has been significant growth in terms of online insurance. It allows you to save time, effort and money. With the help of your IRDA-approved insurance web aggregator portal, an effective plan can be selected, which is specific to your needs.
There you have it, five major mistakes that people make when taking a term plan. Before you take a policy, be well informed with regards to what you are getting. This will make it more efficient for you to select the right plan for you.