Mistakes to Avoid While Purchasing a Term Plan

Life is full of uncertainties and to cope with these ups-and-downs it is important to plan your future wisely.  Buying a term insurance plan right after you start earning can prove to be a good investment to give your family financial protection.  A term insurance plan provides financial support to the policyholder’s family in case of his untimely death. You can do an online term insurance comparison to find out which plan will suit your family’s needs.

 

In our country, insurance still seems to be an unfamiliar concept for a large section of people and therefore, there are many, who make numerous mistakes while buying a term plan. This, however, can later create complexities for their families. Here is a list of some of the common mistakes to avoid while buying a term insurance plan:

1. Not buying your term plan timely

Financial experts often talk about how important it is to buy a term insurance plan in your early years. Unfortunately, Indians have a tendency to avoid insurance plans which further shortens the individual’s policy tenure and costs more. To avoid this, it is recommended that a good and suitable term insurance plan be chosen and bought at a young age itself.

Tip: Try to invest in a suitable term plan soon after you start earning or have a stable income.

2. Settling for insufficient coverage

The main purpose of all term insurance plans is to give your dependents the financial support they may need after you have left them. But unfortunately, people while buying a term insurance plan tend to choose a low sum assured option that proves to be insufficient in the long run. Therefore, it is advised to chalk out your family’s current and future needs and then decide on the coverage amount.

 

Tip: Financial experts recommend that you should at least invest  8 to 10 times of your annual income to adequately cover your family’s financial needs in the future. Anything below this can put you and your loved ones in danger.

3. Choosing a shorter period for your plan

At a young age, it might feel like a useless deed to buy a term insurance plan for 30 or 40 years but in the long run, this can be very beneficial both for your pocket and your family’s security. Buying a short-term plan may offer smaller premiums but its low coverage and expensive renewals make it good for nothing.

4. Opting for a cheap plan

Affordability should never be overlooked but choosing the cheapest plan may keep you away from the best features and advantages offered with a term insurance plan. Therefore, it is important to choose a plan wisely by keeping both affordability and requirements on your mind.

Tip: Calculate your liabilities and assets and then calculate how much sum assured would be enough for your loved ones.

5. Not sharing correct personal details

It is important to share your accurate medical information with the company while purchasing your term insurance plan. In case you have any uninformed illnesses or any other hidden aspects, your nominee might not get the insurance cover at the time of your need.

6. Not purchasing the policy online

Though a lot of people are now purchasing their policies via the online mode, there are still people who doubt this process. Not only does online term insurance comparison get you the best plan according to your needs, but also reduces the hectic paperwork. You can also avail of deals and discounts through an online purchase. All in all, buying a policy online saves your time, money, and energy.

7. Not using the add-on features wisely

There are cases where people believe add-ons to be a waste of money and do not consider them while they may have been beneficial for them. On the other hand, some who add a lot of these end up paying high additional charges besides the base premium. Well, the idea is to balance them according to your needs and affordability.

8. Not reading the policy documents carefully

Last but not the least, one of the most common mistakes found among policyholders is to skip going through the policy documents and details of the plan. Reading the coverage details, terms and conditions, exclusions and claim procedures of the plan is extremely important to avoid further disputes. Moreover, a policy aspirant should do good research over the web and through other sources to check the plan on all grounds.

Tip: Before selecting the insurance provider, do read online reviews and ratings given to it. This can help in understanding its customer approach.

A term insurance plan is the best gift you can give to your family, so that they never have to compromise with their happiness and lifestyle, ever. Today we can use the online term insurance comparison method to look for the best term insurance plans, very conveniently while sitting on our couch, without any hassle. This makes securing your loved ones’ lives even easier. Just take care of the aforementioned points and safeguard your happiness.

Nov 16, 2021
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Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

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