Life is never in your control. To protect your family in case of your sudden demise, term plans, (also known as protection plans) are indispensable. Here are some mistakes to avoid while buying a term policy.
You must not delay in insuring yourself. Young age is the best time to invest in insurance. The premiums are lower and you have the perfect opportunity to cover yourself from unanticipated risks. The best thing to do is buy a plan as soon as you start earning.
- Buying insufficient cover
Term insurance plans protect the family in case of sudden demise of the breadwinner. However, people often make the mistake of neglecting the sum assured. If the sum assured is not large enough, the funds won’t last long. So instead of trying to save money on premiums, make sure that the sum assured is at least 10 times of the policyholder’s annual income for your family to benefit.
- Not understanding the plan
One must study the term insurance policy carefully before investing. Collecting relevant information, understanding the terms and conditions and consulting your insurance advisor is imperative. Clear all your queries – however big and small – before you make the actual purchase.
- Not comparing
Avoid sticking to one company. Different options must be considered before choosing a company. Make a comparison between different companies and their plans and select the best term policy.
Insurance companies often include excessive riders (additional protection against risks) in a simple policy, making it expensive. Don’t get taken in by the supposed additional protection; understand them well and purchase only if required.
- Neglecting the e-insurance option
You can save time, efforts and money by switching to e-insurance. With the assistance of a reliable IRDA-approved web aggregator portal, you can end up with the perfect plan.
- Short-term Investment
It is a myth that you can save on premiums through short-term investments. Rather, it will cost you more. It is advised to get coverage for the maximum term available under the plan.
- Shifting between policies
People often tend to cancel an old plan and buy a new one on realizing that the former will not work out. However, this step is risky because if something happens to you between the period of cancelling the old plan and buying a new one, you are left with no coverage. Therefore, to remain secured, you must buy a new plan before cancelling the old one.
- Inaccurate information
One must make honest disclosures on a term insurance application. To illustrate, if a five-year policy is purchased, you may not disclose all your heath conditions because of the short-term of the insurance However, in the event if something happens and the cause of death is a health factor that is not disclosed in the application, the insurance company will refuse to pay, declaring the policy null and void. Therefore, beneficiaries will get nothing.
- Low premium quotes mislead you
Companies quote low rates of premium by excluding numerous things to expand business. Therefore, you must choose a reputed insurance company which provides a policy with no hidden costs.
Avoid these mistakes to choose the best term policy from 5 Paisa Insurance.