4 Common Mistakes to Avoid while Buying Your Term Insurance Plan

I have always been of the view that it’s wiser to keep investments separate from insurance. And that means sticking only to plain-vanilla term insurance plans instead of moneyback endowment policies.

Buying term insurance is very important to fulfil your and your family’s protection needs. Such a plan provides coverage for a specified period, thus giving you financial security and proving to be extremely useful in cases of emergency. But even when you have decided to buy a term plan, it is essential to choose the correct insurance plan for them. Some of the most common mistakes that people make and you should avoid are:

1 – Selecting the cheapest policy

Several potential policyholders think that the cheapest policy will save their money while giving them the required financial security. They browse through a lot of policies and choose the one that carries minimum charges.

Opting for the cheapest term insurance plan is not always the smartest idea. It is important to know that when you select such a policy, you might lose out on some vital features. Factors like flexibility, length of guarantee period, convertibility rights, available riders and the company’s financial standing are crucial points of consideration when selecting a policy.

Choose a policy with more worth than one with lower cost alone. You can easily compare term insurance policies over the Internet. You will soon realize that by paying just a little more, you may get a range of useful features.

2 – Failing to get proper coverage

Review your family’s needs taking into consideration the age, lifestyle and requirements of each member. Also review your annual income including tax payments. These should give you a fair idea of how much term insurance cover you need.

3 – Ignoring the tenure

Determining the period for which you require the coverage is very important. The term of the plan should be sufficient enough for your needs. Choose the tenure according to your age. For instance, if you are in your 20s then you might require a longer tenure than someone who is in his 60s.

4 – Taking a break between policies

Many policyholders realise they made a mistake after choosing a policy. In such a situation, they drop the current policy and later opt for a new plan or a new insurance provider. This could prove dangerous – what if they encountered an emergency in between policies Always choose a new term plan first and then drop the earlier one. This will ensure that you don’t lose coverage at any time.

If you make any of these mistakes while choosing a term insurance, your plan would prove futile to give you protection and may rather act as a financial burden to you. To avoid facing such problems, stay wary of these common mistakes. Choose the perfect term insurance plan and protect your family well.

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Written by Dev Ashish

Founder - Stable Investor Investing | Personal Finance | Financial Planning | Common Sense

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