Published On: Tue, Nov 20th, 2018

Avoid these 5 Mistakes while Purchasing Term Insurance

Avoid these 5 Mistakes while Purchasing Term Insurance

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When it comes to enlisting some of the prudent life decisions, purchasing term insurance readily shows up on top. Having a term insurance scheme can have diverse benefits, especially for the family of the insured. However, certain mistakes can seriously impair the effectiveness of the policy. Therefore, it is only appropriate that we throw some light on the most common mistakes people make while purchasing a term insurance plan besides finding ways to mitigate the same.

What needs to be understood that it all comes down to purchasing a policy that’s in accordance with the user requirements and the inability to do so can lead to financial loses. Moreover, unlike a pure life insurance policy, term plans only offer benefits upon death and aren’t usable if the insured outlives the policy period. Therefore, it is very important to consider a host of factors before going on about the purchase.


 

  • Shorter Policy Period

 

As mentioned previously, selecting a shorter-term insurance period isn’t going to be of any benefit, especially if the insured outlives the tenure. A majority of individuals purchase shorter policies in order to pay lesser premiums which negatively impacts their chances of getting a good cover for their family. A term policy isn’t a typical life insurance scheme and doesn’t offer any benefits except the ones in case of timely or untimely demise.

 

  • Insufficient Policy Cover

 

Put simply; a term insurance plan offers a decent sum to the family of insured upon policy maturity. However, there are times when the concerned individual ends up purchasing a plan with insufficient cover, without considering the current income, possible inflation, and the evolving living standards. Therefore, an ideal term plan must be at least ten times of the current annual income.

 

  • Minimal Comparisons

 

Different term insurance plans have a different set of features or essential benefits. However, lack of comparisons means that the individual often selects a less aligned policy which backfires in the long run. Moreover, people tend to purchase their policies from the company they have known the longest without even looking at that company’s online term plan claim settlement ratio. These are the people who regret not doing complete and thorough research before purchasing the plan. This is why comparing diverse term insurance policies offered by insurers like Max Life Insurance, and others is essential, it allows individuals to choose the best plan, according to their necessities.

 

  • Incomplete Disclosures

 

Regardless of policy tenure and maturity period, it is essential to furnish the correct set of information, in order to avoid non-payment issues, later in life. There are times when the buyers avoid certain disclosures in order to minimise the premium rates. These might include furnishing some of the more unlikely ailments which end up attracting higher payments.

 

  • Not Going Online

 

An online term policy is the newest trend as a majority of insightful details are only found over the internet. Relying on various avenues for purchasing online term plan shouldn’t be ignored as these usually have the complete set of details regarding rider additions, money-saving schemes, and what not. Most important, e-insurance is something that cuts out the offline middlemen; thereby helping individuals get hold of better deals.

Mistakes committed while purchasing term insurance policies are common yet extremely detrimental to a family’s state of well-being. However, one can still take note of the mentioned goof-ups and make smart term insurance choices, before finalising the most appropriate one. Whatever be the selection and purchase technique, a policy must come as a support to the family and not compromise the benefits in one way or the other.

 

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