Term insurance plans have an array of benefits that you can best deploy to acquire maximum protection. The primary purpose of a term plan is to provide the sum assured to the nominee in case of your sudden unexpected death during the policy term. However, you should get the policy right to serve your needs perfectly.
Here are a few mistakes that you need to avoid while purchasing a term insurance plan.
- Purchasing the term plan late: You should purchase a term plan in your 20s to get the most affordable term insurance premium. Due to your healthy medical conditions, the probability of death risk is comparatively lower when you are young. As a result, the premium rates are substantially lower. When you purchase it later in life, the premium amount will be higher for the same sum assured and the policy tenure.
- Getting insufficient life coverage: Purchasing a term insurance plan with insufficient life cover will not ensure the required financial support when the time demands. As per the experts in the domain, you will require a sum assured of at least ten times your current income to let your family handle the financial expenses later in your absence, considering the inflation.
- Buying for a lower tenure: If you are purchasing term insurance for a lower tenure, you are risking the financial stability of your family members. It should essentially cover up till you start getting your retirement benefits or have sufficient liquid assets and investment returns to handle the financial requirements at the specific year.
- Not disclosing existing medical conditions: Many people tend to not disclose pre-existing illnesses or serious health conditions during the purchase of a term plan. However, it can lead to severe consequences or even rejection of your death claim subject to certain terms and conditions. Death due to smoking and drinking habits and pre-existing illnesses may not be covered or costs more in the term plan.
- Not comparing different policies: If you are not interested in comparing the different policies available and decide on getting the first plan you come across, you might lose the benefits of a perfect term plan that suits your needs.
- Not purchasing online: Some people consider purchasing the pure term insurance plan through a broker to understand the plan and its features. However, the online platform provides a detailed analysis of the different products and their benefits. You can avoid unnecessary brokerage charges while purchasing the product online.
- Not considering riders: Term insurance plans have been introduced with add-on rider benefits. You have to understand the different riders and their benefits and purchase the required ones to provide and ensure complete protection to your family. The TATA AIA term insurance plan provides an array of comprehensive rider benefits considering different difficult medical and death scenarios.
- Not understanding the policy document: Most people get the term plan considering the family financial protection and sign the form without reading the policy document carefully. Term insurance plans in India have similar features. However, there can be specific features that distinguish the plan from the rest and those you need to know.
- Concerned more about the cost: If you are just concerned about the plan’s cost and do not consider the exact requirements, you may end up purchasing a term plan that may not suffice for your family’s needs when it is utmost needed. Make use of the term life insurance calculator to get a fair idea of the cost and the benefits to derive the right balance based on your income.
We have seen the different kinds of mistakes that you might make while purchasing a term insurance plan. It is necessary to focus on your family needs considering all the essential factors to opt for a term plan with all the features. Ensure to purchase one and get it right for a lifetime of freedom from anxiety!