Common mistakes to avoid when buying a term plan
A term insurance plan is a popular life insurance product because of the unmatched benefits it endows. It promises your family a lump sum benefit in the event of your untimely demise and that too at very marginal premiums. Which other investment instrument promises you this?
Don’t scratch your heads. No other investment does. That is why term plans have become popular. The benefits promised the low premiums and also the payouts structure have made term plans the part and parcel of everyone’s financial portfolio. However, when buying a term plan, individuals are not careful. They commit some very common mistakes because of lack of knowledge or because of their ignorance. Some common mistakes made include the following:
Find out why term insurance is a must buy
Choosing a low Sum Assured level to save on premiums
The USP of term plans is that they promise a high coverage at very low premiums. Thus, these plans are the only life insurance plans which let you afford a very high coverage level. However, when you buy a term plan you often skimp on the amount of the Sum Assured for saving few hundreds on the premium outgo. This is a mistake. The Sum Assured should be selected based on your lifestyle requirement. It should be sufficient enough to provide for all your financial obligations in case you are not around. If you are not sure about selecting the correct coverage amount there are online term insurance calculators which help. They let you calculate your ideal Sum Assured level based on your financial profile. So, when buying a term plan, choose the optimal level of coverage to ensure financial freedom.
Term plans promise to pay the benefit only if death occurs during the selected term of the plan. If you survive the chosen plan tenure there is, usually, no maturity payout. People usually tend to choose a lower tenure which gives them coverage for a lower period. If you are to enjoy maximum coverage under your term plan go for the highest possible tenure. A higher tenure would cover you till a longer age which increases the probability of the plan benefits being paid.
- Not filling or verifying the proposal form
Very often, when you buy a term plan from an agent or broker, all you do is sign the form without bothering with the details mentioned therein. Even if you do fill your proposal form, you lie about certain details asked in the form. This is a mistake. The proposal form forms the basis of insurance contract based on which your policy is issued. If you do not verify the details or misrepresent any important fact your claim might get jeopardized. Your policy might become null and void if any important fact is not informed to the insurance company. So, whenever buying a term plan, make sure to fill in the proposal form yourself and verify that all the information mentioned therein is true and correct.
Do you know how many term insurance plans are there in the market? Too many to even count! Every plan, though similar in nature, has different features and benefit structure. Even the premium rates differ across different plans. So, if you buy a term insurance plan without comparing the different plans you are bound to make mistakes. Either you would buy a plan with lesser features or end up paying a higher premium. So, always compare the different term insurance plans before you buy one. If you need help you can find assistance at Turtlemint.com. You can enter your details and find out not only the ideal Sum Assured but also the different premium quotes. You can compare the different premium quotes against the plan’s features and buy the best plan for your needs.
Buying a term plan, though commendable on your part, should be done only after careful consideration. You should avoid making these mistakes if you want the best term insurance experience. Just a little knowledge, some extra effort towards plan comparisons and you can buy the best term insurance plan. The plan would not only give you adequate coverage for an adequate tenure, it would be reasonable on your pockets too.
Read more about What is insurance and how does it work?
Read more about Common terms in life insurance policies
Read more about Life insurance policy in India – How does it works?
Feel free to share your comments below