5 Mistakes you must avoid while buying a Term Plan

Amit got a term plan in hurriedness and became a dupe of mis-sold term plan. Though an individual learns from his own faults, you can certainly learn a lot more from Amit’s experience.

Buying a term insurance plan would be the best gift ever that you buy for yourself and your loved ones. It covers you from the unforeseen situations like death thereby providing the sum assured in lumpsum or monthly or a combination of both to your nominee while you peacefully pass away. But are you aware of the key points to be considered while you buy one? Many of us fall prey to mis-selling of insurance products and then regret not having done a proper research before finalizing on one.

These 5 points will give you a clear-cut picture of the common blunders you have to avoid while buying a term insurance plan.

1. Don’t wait to buy a term plan

   It may be you are young enough to buy yourself a term plan. But delay to buy one would refrain you from covering any unexpected risks. It can be that you have just started earning and can easily afford to pay the little amount every year. So why delay needlessly when you can buy yourself a term plan at an early age. By doing so, you can avoid struggling for ample cover in emergencies with your rising age and also have the benefits of a lower premium.

2. Don’t buy a term plan for a shorter term

   You will definitely commit a blunder by buying a term plan for a shorter period say about 10 years with an intention to shell out a lower premium. For instance, it doesn’t make sense to buy a term plan for 10 years and post completion of 10 years buying another term plan for a higher premium as your age too increases. A person in his 20s would require a term plan with a higher tenure than the person who is in his 50s.

3. Don’t take a break in between your term plans

   A lot of people commit a blunder by dropping the current term insurance policy and then going for a new policy or a new insurer. What happens in the meantime, if a tragedy occurs? This could be too unsafe since you stay uninsured with any of the insurance providers. So, it is suggested to always buy an alternate plan first and then drop the previous plan that you might have been unhappy with.

4. Don’t unnecessarily opt for excessive riders

   Riders or add-ons undoubtedly enhance the insurance plan. But, buying excessive riders would at times make an otherwise cheaper plan a pricey one without offering better returns. For example, a critical illness plan could be bought in a better way than buying it as a rider in your term plan. Besides, be aware of your requirements and then go for riders smartly.

5. Don’t forget to inform your family about your term plan

   Buying a Term plan is definitely a great decision. But did you inform your family about your purchase? No? In that case, you are seriously creating a big mistake by not keeping your family informed about the term plan since they may not know how to use the policy if the situation demands.  Imagine a situation where you leave this world peacefully without telling your family about the term plan that you had otherwise purchased for their comfortable lifestyle. Therefore, it is important to understand the plan you opted for and then inform your family accordingly.

STAY AWAY from these common mistakes and buy a term plan that proves as an asset for your beloved family!

Chirag Iyer - BFSI Enthusiast

Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing.