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Mistakes While Buying A Life Insurance Policy

  1/10/17 5:56 AM

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Buying an insurance policy online is faster, convenient and hassle free. Thanks to eCommerce, the online world has made the entire customer journey and insurance buying much simpler and convenient. A basic knowledge of the internet and a decent connection is all you require to analyse your needs and get yourself covered. However, there are a few common mistakes that we do while buying an insurance policy online.

Inadequate Research Before making a purchase:

While buying life insurance policies, our decision is usually based on two major factors cost of the policy and the claim ratio of the insurance company. Now when it comes to pure term plan, features and cost do matter but in the case of claim ratio. As per the recent IRDAI amendment under section 45 of the insurance act, life insurance companies cannot reject insurance claims after 3 years of the policy term. So now you can be worry free and select a plan that has more features and value for money.

Not providing the correct information:

While filling an online form, always make sure that you fill in the correct details. Even if there’s a minor lie or manipulation of facts, your policy may not be issued and hence the details and documents you submit should be complete and correct.

Buying inadequate life cover:

Most online policies offer low premium rates, so even if you get a sum assured as high as Rs 1 crore you can buy it by paying an annual premium as low as Rs 4940 which comes up to Rs 14/day. Now many people have this misconception that they may not require a cover as high as Rs 1 crore but you have to consider inflation, your outstanding liabilities like if you have a personal loan or a home loan etc. In many cases the buyer sees a high sum assured and feels that he/she will have to pay a huge premium cost.

Buying Insurance only for tax purpose:

All insurance policies provide tax deductions, however this is an additional benefit. The main purpose of insurance is protection or providing a life-cover. Many times people opt for less sum assured because they only want to save tax. Avoid confusing a benefit to the actual purpose of life insurance plans. Buy an insurance plan and choose a cover that will suit your needs and your family’s needs.

Lack of knowledge and confusing one plan to another: Life insurance companies provide an array of plans that meet your needs from protection to investments. Many people confuse endowment plans to protection plans. Endowment plans provide returns while the policyholder is alive. They also provide death benefit but this cover is not very high. Endowment plans are suitable when you have a financial goal to meet like paying for your kid’s education, down payment for a house, etc. Term plans purely provide protection to your dear one’s. A term plan will only provide life cover, so incase an unfortunate event occurs to the policyholder’s family, the nominee receives the entire sum assured. Term plans provide high sum assured at low premium rates. So if you have any dependents then it’s better to buy a term plan because life is uncertain and a term plan will ensure that your dear ones are completely secured.

 

Siddhant Dubey - Writer & Photographer

Siddhant works as a freelance content writer who is interested in a wide range of spheres from photography and personal finance to cooking. He is also an aspiring photographer striving to showcase life around him through his vision.

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