As the name suggests a Term Insurance
plan is a kind of insurance plan that is designed to cover for a particular
period. This insurance plan also provides you with the benefit on the death of
the insured over the total sum assured in the insurance. It is very tactical to
purchase the best term plan to get the maximum benefit of what you have
invested in the plan.
Nobody wishes to lose their hard
earned money so easily and that is why you need to be extra careful while
selecting a term plan for your requirement. Here are some common mistakes that
people do while selecting a term plan for themselves. Knowing and avoiding them
would help you get the most returns on what you insure.
Buying
insufficient cover:
the main motive behind the purchase of a term plan is that even something
happens to the policyholder in between; the family should not suffer the
consequences and lead a comfortable life even after him. If the sum assured you
opt for is inappropriate then it becomes hard to meet the needs when it is most
required and the purpose fails. The sum insured in a term plan must be at least
10 times of the annual income of the policy holder.
Procrastinating: It is advisable to buy
insurance when you are young and healthy since by doing this you get the best
opportunity to cover all of the unforeseen risks pertaining to the life. You
should not procrastinate with term
insurance
as with the increasing age the premium of the plans also increase.
Taking
shorter term plans:
A very common problem that most policyholders do is that in order to save money
most of us tend to purchase term plans with shorter terms and result in
inappropriate coverage by cheap plans with lesser premiums and so. A lengthy
term plan is beneficial in terms of covering higher risks that too for a longer
time period.
Inappropriate
information:
another most common mistake that most of the policyholders face while
finalizing a term plan is inappropriate disclosures. If you have insufficient
and incorrect information about where you are investing your money then It is
very likely to land into the financial loss in different ways.
Excessive
riders:
Sometimes extra riders are beneficial but in most cases, excessive riders in a
term plan may act as boomerang in terms of financial benefits. Excessive riders
prove to be highly expensive in most cases without even offering the basic
return to the policyholders.
Not comparing
insurance companies:
With the advancement of time, various new options in the field of term
insurance has also come up with numerous benefits as well. Most of the
insurance buyers tend to buy policies from only those companies who they know
for some time. This could also land them into a financial loss as they missed
out to compare with other term facilities and coverage that other companies are
offering in the world of competition.
These mistakes may appear very silly but they are highly expensive when your hard earned money is at stake. So, better try avoiding these mistakes to get the most out of what you insure.
