Term insurance helps you in making a financially stable future for your family in an event of your death.
It is easy yet important to have a term plan, but more important than having a term plan is to not make these insurance mistakes:
Not making a complete disclosure:
Incomplete disclosure can directly lead to policy getting null and void (cancellation of policy). This is the main reason why we must have full disclosure of health history, profile and income. If something goes wrong after policyholder’s death, an undisclosed health disorder can create the dispute the benefit payout and it might lead to the rejection of the claim.
Relying on Group Life Cover:
When we talk about health insurance, more than few times we go for a group cover which mostly is not enough for the group. Group life cover which is likely to be of 2 to 5 times of the total salary of the group is not enough as life insurance of the group.
Buying plans with short periods:
While purchasing insurance we may choose to cover ourselves for a shorter period so that the premium will be lower. In long term, it is a bad decision for yourself. If you buy insurance for 15 years at the age of 25, it will mature when you are 40 years old, after which the real risk starts. You shall then have to take a new insurance plan, which will be more expensive owing to the increase in your age. If your health is not very good, you might not be eligible for one.
Purchasing an inexpensive plan:
Nothing is wrong in wanting to save money, but if you ever plan to go for an inexpensive plan, you might not get the flexibility, riders and other important features in future when you need them the most. While purchasing the insurance plan, some key points to take care are the length of guarantee period, companyâ€™s financial standing, a reputation of the company and claim settlement ratio of the recent years.
A delay in purchasing:
The more you delay, the less you get. The best time to purchase the insurance plan is when you are young and have just started earning. More you wait, expensive it gets. Chances are, that you might get some health issues later which either make insurance expensive or you might not be eligible to get one at all.
People sometimes change their plans when they see former plans are not working out properly or are not at par. A delicate time is when the former policy has been surrendered and the newly purchased policy is in the process, at this time if any mishap happens, the person is left without any coverage and hence no protection. To stop this from happening, cancel the former plan only after getting the new policy in your hand.
Blind faith in one company:
We generally make a mistake of not comparing policies. Analyzing, understanding and comparing different policies is important as you might find a better deal with the same plan and less premium when you explore more. Insisting on only buying insurance from public sector insurers may come at a certain cost.
Not opting for online plans:
To get the best comparison and have a hassle free process one must try to purchase insurance online. While purchasing insurance from an agent/ broker, you paying them indirectly from your premium through commissions. However, while purchasing online (directly from the insurer) you save on the benefit given to the middlemen. IRDA approved portals are the best place to compare and select the best plans in sync with your requirements.
Not understanding the plan:
This can be a problem that you brought upon yourself. While purchasing the policy, reading all the terms and conditions properly is important: discounts, coverage, inclusions, exclusions are all important things you and your family must know. If any doubts occur, do solve it with your insurer. If you have not studied the plan thoroughly, you might not be able to tackle the situation during disputes of claim settlement.