When you plan your finances for the future, it is never possible to accurately prepare for all financial obligations. You never know when an unexpected expense may crop up. However, you must make provisions for such expenses and be ready for whatever comes your way. And one of the best ways to be fully prepared for future obligations is to buy a term insurance policy.
It is vital to give your family much-needed financial protection and security in the event of your untimely demise. A term insurance plan is one of the simplest and most cost-effective ways to get life insurance coverage. While many insurance companies offer a term plan at competitive rates, the process of buying a policy can be confusing for some first-time insurance buyers. You can also buy more than one term life insurance policy.
In this article, let’s discuss a few common mistakes that people make while buying an online term insurance and how you can avoid them.
- Getting insufficient cover
The primary objective of buying a term plan is to help the family cover their future financial needs. However, many people tend to miscalculate their needs and buy term insurance with low sum assured.
Insurance experts, worldwide, suggest considering the thumb rule while buying a term insurance policy. The rule is that you should pick a plan with a sum assured that is at least ten times more than your annual income. You can also pick a cover that is more than this amount if you feel your family may need more funds.
If you are unsure how to pick the right sum assured, you can talk to the insurance company’s representatives or use a term insurance calculator for making an informed decision.
- Choosing a short-term plan
Term insurance with shorter terms may have a lower premium, but it comes with a risk of limited financial protection for your family after you. Term insurance plans are helpful for claiming a death benefit that is supposed to help your family take care of themselves, when you might not be around.
Also, buying a new term plan when you are over 40 may attract a higher premium. Hence, it is better to choose a long-term plan for 30 years or more when you buy it for the first time. This will help you get the plan at an affordable premium, and you can give your family protection for a long time.
- Not sharing accurate information
Accurate health information can help you get the right cover and a smooth claim process in case of the death. Many people refrain from disclosing health information to get the policy at a lower premium. They fail to realize that they might escape from paying higher premium but the insurance company has the right to deny the claim if the uninformed health problem causes the death of the insured. This can put your family in a tricky situation as not getting the insurance benefits may cause financial stress.
Hence, it is recommended that you honestly mention all the details of your illness and health conditions you may have in the policy application. This may slightly increase the premium, but it will benefit your family in the long run.
- Not buying the policy online
Many people prefer buying a term plan from their insurance agent. However, purchasing a policy offline can be more expensive than buying online term insurance. Many insurers offer exclusive discounts and other benefits to online policy buyers. Also, when you buy term insurance online, you can easily compare the different plans and make an informed buying decision. Besides, tax benefits for both type of purchases remain the same.
- Not buying a term plan at a young age
Many people believe that they don’t need a term cover until they are old or have dependents. However, you get a higher cover at comparatively lesser premium if you enrol in a policy at younger age. So, get yourself a term plan and give your family the protection they deserve.
Now that you know the common mistakes people make, do your diligence and choose a term insurance plan that perfectly suit your needs.