There are important mistakes that you must avoid when you opt for a term insurance plan. Term insurance is a very useful form of life insurance, but people make some common mistakes when getting term insurance which hampers the prospects of coverage. Take a look at this article to understand what these common mistakes are and how you can stay away from them.
Common mistakes to avoid when buying term insurance
1- Opting for insufficient coverage
A common mistake when getting term insurance is choosing a small coverage amount. You need to be mindful of your family’s requirements and long-term goals when you choose a term plan. Do not settle for a small amount, as that may not be enough for your family after your demise. Look for a proper option such as an INR 2 crore term insurance cover. This will properly provide for your family and help them to continue with a comfortable lifestyle if you die prematurely.
2- Opting for a shorter tenure
Just like the coverage amount is important. The coverage tenure is also crucial. The term insurance policy must protect your family till the time your dependents are capable of earning a living themselves. For example, if your child is 5 years old at the time of buying the plan, you need to get a term plan for 20 years. By the time he is 25 years old, he would be financially independent and that would help him to live without the help of your term insurance cover.
3- Not opting for riders
Riders are add-on covers that allow you to customize your plan and make it tailor-made for your requirements. The common term insurance riders include the critical illness rider, the disability rider, etc. Riders are very handy additions, but they come at an added cost. Do not make the mistake of not considering riders. Evaluate the available riders and choose the ones that would help make your plan better suited for the needs of your family.
4- Not getting term insurance early on
A common mistake is delaying the purchase of the term insurance policy. Ideally, you need to buy term insurance in your 20s when you are young and healthy. However, you can get term insurance at any time. So, if you are still delaying the purchase, do it right away without any further as you never know what challenges life can throw at you at any time.
5- Not comparing
You must compare term insurance before making a purchase. This will help you to find the best plan at the best rate. Do not buy the first plan you come across as you need to know what your options are. Also, do not base your decision only on the cost of the plan. If you feel like the policy is not comprehensive enough, or the insurance provider doesn’t have the best reputation, look for another option.
6- Lying on the application form
This is a serious and vital mistake that leads to several complications later on. You should be very careful when filling out the term insurance application form. You need to put the information accurately. Do not make any mistakes, voluntarily or involuntarily. Even a small mistake at this time can lead to big problems, including a claim rejection, later on. You won’t even be around to help your dependent family members if that happens, so be extra careful and submit an error-free term insurance application.
7- Not reading the clauses
Last but not least, do not make the mistake of buying term insurance without reading the terms and conditions. You need to read the policy wording very carefully to understand what is included and what is excluded from the term insurance coverage. If you do not agree to any clause, speak to your insurance provider and see whether it can be modified. If not, opt for a different plan that has more favorable clauses.
The final word
Now that you know more about the common term insurance mistakes, ensure you buy the right coverage without any errors. Keep the points mentioned above in mind, choose the right cover for the right term, and get the best value out of your purchase.
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