Insurance products like life insurance term plans have made getting financial security very cheap. In a term policy, you can get a life cover of ₹1 crore for an extremely affordable premium. However, as simple as the product is, buying it can be even trickier. As a result, you could end up making many mistakes you while purchasing it. Ensure to go through these in order to avoid them.
- Thinking you do not need it
Because you are still young or are already financially strong, you may think that you do not need term insurance. However, the very concept of term insurance is to assist when things go bad. And what can be worse than a situation where your dependents are left unsecured after you are dead. Moreover, there are a lot more things you need to consider before you think about foregoing term insurance.
For example, in the future when you get married and have children, your spouse and children may depend on you for their regular requirements. In case of your death, they are left defenseless against the various challenges of living. Now, if you buy term insurance, your dependents get a huge amount of money as death benefit, which can be used for years.
- Hiding information
When buying term insurance online, you will be asked to fill out an application form. This application form will require you to input various kinds of information. This will include your personal information, financial records, health records, among many others. It is important that you provide accurate information.
One of the major reasons that a claim on your term insurance policy may be denied is non-disclosure of vital information. This means that if you have hidden any information from the insurance provider at the time of buying the policy, your claim will be considered invalid once the insurer finds out. Hence, it is important that you share every piece of information that is required.
- Not selecting the right coverage
A term policy provides your family with enough money in case of your death. Unless your policy does so, it is of little use to you. While there are many advantages of having term insurance in India like affordable premiums, they are not enough unless the coverage amount of the policy is adequate.
- Going for the cheapest policy
Buying the cheapest term policy is not always the best option. When it comes to insurance, premium and coverage are directly proportionate. Hence, if you go for a lower premium, there is a chance that you may end up with a policy with low coverage. While you may enjoy the premium now, your family may end up suffering due to low claim amount. Use a term plan calculator to determine the ideal coverage amount that can suit your budget.
- Not comparing policies
The idea is to have a sense of what your ideal coverage is and then look through various policies to find the one that comes closest to it. Not comparing policies could mean that you may end up with a policy that may not be favourable for you and your family.
Now that you are aware of the common mistakes made while purchasing term insurance, keep these in mind and ensure not to make such errors to avoid any inconveniences. The more you know before your buy term insurance, the better it is for a quick and smooth purchase.