While picking a term insurance plan, it is easy to make mistakes that could cost you. Even if you might want to save tax by declaring insurance plans as a part of the filing, it is possible to pick up the wrong term plan, in a bid to get one that helps save the most.
Regardless, you are bound to make several mistakes whilst selecting the right term insurance plan, which might mitigate each one of your immediate and futuristic goals considerably.
Common Mistakes to Avoid
Trusting without research
It might be a costly mistake to purchase a term plan by simply trusting the word of the agent. While they are more motivated by commissions, it is possible that they might end up recommending that’s only good for them.
Considering every Policy as the Same
There are quite a few variants of life insurance policies in play. While the endowment plans are most common, you can even choose a ULIP for getting a flavour of the equity and debt funds. However, term plans are special and need additional research, and hence, must be selected carefully.
Not thinking the Amount through
It is important to take the help of a term insurance calculator to ensure the exact value of the sum assured. Most individuals are either underinsured as per the current rate of inflation or even over-insured, merely to overcompensate, which might end up attracting higher premiums.
Not Sure about the Tenure
A term insurance plan is tenure-specific. This means, you need to pay the premiums for a certain period and the cover for your death extends a few years beyond the last premium date. However, this is just a generic ballpark and you must be very careful regarding the term of the plan as anything beyond it wouldn’t fetch any returns.
Not thinking about the Upgrades
Getting a plan that doesn’t let you upgrade the cover value is useless. Also, not knowing whether an upgrade is necessary to account for the additional responsibilities is also one of the major mistakes.
Ignoring the Riders
While a term plan is good, you must fit in riders, depending on the existing ailments, chances of permanent disability, and even premium return in certain cases. Not accounting for these can land you in a lurch in case you end up facing something other than death.
Only relying on Offline Sources
Purchasing plans from old school agents is a sham. Instead, you can always opt for online purchases to save some money on the premiums.
Failing to Cross-reference the Insurer
The settlement ratio of the claims, as boasted by the insurer, is also important to take note of. However, haste leads to waste as most individuals get stuck with dubious insurers that aren’t exactly known to honor claims with seamlessness.
Avoiding these mistakes is necessary if you want the term plan to be an all-inclusive financial solution for your family. While you take care of these mistakes when buying yourself a Term Plan, you must also take a look at some government-launched life insurance schemes like the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana(PMSBY). PMJJBY and PMSBY are designed for poor and economically challenged citizens.