Mistakes to avoid while buying term insurance

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.