Term Insurance 1326 views February 13, 2019

Mistakes You Must Avoid While Buying Term Insurance Plan

Buying a term insurance plan is not a matter of choice, but a necessity to ensure that your family stays protected even in the most trying circumstances synonymous with death. While most people are aware of the purpose and benefits of buying a term policy, certain mistakes committed innocuously not only result in missing out on the best term plan, but may also cause unfortunate rejection of the insurance claim.

Term Insurance

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Term Insurance Policy in India

Mistakes like paying for the wrong term insurance, not seeking appropriate coverage, opting for a very short policy term, filling in wrong details, etc. are common. It is necessary to exercise caution and understand the benefits that the various term insurance plans in India offer before selecting the best term insurance plan for your dependents. With an increasing number of people in the country realizing the importance of paying for a term insurance policy, let us look at the common mistakes that defeat the purpose of buying the plan.

Mistakes to Avoid While Buying Term Insurance Plans in India

Some of them are listed as under:-

Inadequate life cover

The purpose of buying term insurance is to ensure that your loved ones are not subject to unwarranted financial burden after your death. Choosing the right cover involves taking into consideration their existing lifestyle, unfulfilled responsibilities, an effect of inflation and unforeseen expenses. An insufficient sum assured will not last long, thus, pushing your dear ones into possible economic crisis. It is important that the sum assured that you opt for must be at least 10 times your current annual income. Also, having an appropriate sum at their disposal will enable your nominees to decide on the next course of action in your absence.

The tendency to postpone

Buying a term plan insurance has its own set of benefits. Most young people tend to live on a fast track, thus, disregarding the importance of buying a term insurance policy to keep their loved ones safe. In addition, the premiums for any term insurance policy, when brought young, are much lower. This is because one is more likely to be healthy and bereft of critical illnesses at a young age. Also, applying for a term policy when young relieves you of the need to undergo a comprehensive medical checkup that many insurers stress for to check if their potential customers are suffering from any lifestyle disorders or undiagnosed health issues.

Ignoring the online route

The pervasiveness of the internet and the current trend to go digital has forced many best top private insurance companies in India to avail their products online. With so many insurance aggregator portals on the web and companies putting up their products on their websites, customers enjoy the benefit of buying term insurance online. In addition, term insurance plans in India bought online are way cheaper than their offline counterparts. Also, buying online allows one the comfort of comparing the features of various term plan insurance policies available and carry out thorough research regarding the same. Apart, the use of term insurance premium calculator helps to calculate the exact amount of premium corresponding to the chosen amount of coverage that would monetarily secure the nominee(s) in case of the unfortunate demise of the insured. Buying insurance online can be a great way to save time, effort and money.

Shorter policy period

The biggest blunder is that people try to save on their premium amounts by opting for a short policy term so that they would not have to bear the burden of paying premiums for long periods. While this may seem like an effective strategy to pay a lesser number of premiums, the quantum of loss suffered in the end is much more than what had been anticipated. A lower policy period defeats the purpose of having bought term insurance as the insured does not get any survival benefits after the policy expires. Also, the insured has to buy a new term policy at higher premium rates due to increasing age factor. In case, the insured has been diagnosed with some life-threatening chronic health problem while buying the second term plan insurance, he or she may be denied insurance. It is always advisable to seek life cover for the maximum period available to ensure death benefits to the nominee(s) of the insured.

Incorrect details

How many times have we heard about insurance claims getting rejected owing to wrong information or incorrect details being submitted? Most people avert making true and complete disclosures while filling details on the life insurance application to avoid paying increased amounts of premiums, for example, not disclosing any existing illnesses or nagging health issues. In the event of death traced to some pre-existing illness, the insurer might consider denying the insurance claim or subject it to litigation.

Paying for too many riders

Agreed that rider benefits help alleviate the impact of any untoward event. However, letting the insurance company add too many riders would add to the premium charges on your original term insurance policy. While adding these riders may seem like an excellent idea to achieve all-round protection, it may prove to be costly in the long run. Before including riders in your term insurance policy, check if you really need them. Also, check if the benefits promised with these additional riders can be attained with a cheaper and better alternative.

Death has neither any substitute nor an alternative. Having a term plan insurancein place, however, covers the financial risk due to the untimely death of the insured. To ensure that your loved ones would benefit from the term insurance you have paid for, it is important that you look into the finer details along with the pros and cons of each policy before zeroing on the best term plan. With its inherent features like simplicity, competitive pricing, flexibility in premium payment and taxation benefits, buying term insurance is surely the best way to keep loved ones financially secure in case of a sudden and unfortunate demise of the policyholder(s).

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