Common Mistakes to Avoid When Buying a Term Plan
Life is very uncertain, making term insurance even more essential than it already was. Getting a suitable term plan depends on informed and sound decision-making. There are many reasons why you may pick the wrong insurance plan. Not assessing your needs well, lack of understanding of a particular product, not using a term insurance premium calculator to calculate your expected premium, etc.
Hence, if you are aware of some of the common mistakes to avoid while purchasing a term plan, buying it can be easier.
Avoid These Errors While Buying a Term Plan
Many individuals tend to make mistakes or errors whilst deciding to buy a certain term plan. Hence, it is important to know about the product offering, take advice from professionals and make a buying decision. Here’s looking at some of the errors that you can avoid.
● Settling for the First Insurance Company
You need to look beyond the insurance company you already know or the first company you come across while selecting a plan. It is always better to have a knowledge of the various options available in the market that may help you find a better and more affordable plan with more coverage.
● Delaying Buying the Term Plan
Buying a term insurance plan at a young age has many benefits, including lower premiums, since age is one of the main factors determining your premium. With age, you may face health conditions leading to increased premiums and lower coverage amounts.
● Not Choosing a Better Coverage
Your term insurance must address your family’s financial needs in your absence. Hence, before choosing the insurance coverage, you should consider all the liabilities, inflation, and expenses.
● Choosing a Shorter Policy Term
When you choose a shorter term, you will most likely survive the policy term. If you have opted for a pure term plan, you will not be eligible for any maturity benefit. Moreover, you will be underinsured and may need to buy another term plan at that age, making it a costly proposition.
● Incorrect Information
Not sharing your accurate health condition and lifestyle choices will do you more harm than good. You may choose not to reveal your current health condition which may lead to claim rejection. For example, suppose the cause of death of a policyholder reveals an underlying condition which was not mentioned or disclosed to the insurance company at the time of policy purchase. In that case, the insurer may deny paying the death benefits to the beneficiaries.
● Going for Lower Premium Quotes
Opting for a low premium may not always be beneficial. Choose the insurance provider that has a good reputation in the market, offers plans that suit your needs, and offers excellent customer service. Doing a need vs cost analysis is crucial.
Wrapping Up
There are various things that you must keep in mind while choosing the right term insurance plan. Avoid the above-mentioned common mistake to ensure you pick a plan that aligns with your needs and fits your budget.
Frequently Asked Questions
What is the best age to buy term insurance?
Although there is no perfect age to buy term insurance, the earlier you buy, the better. Buying it at a young age can be highly affordable and provides adequate coverage to your loved ones.
What factors to consider when buying a term plan?
Important factors to consider while buying a term plan are the coverage amount, policy term, premium, riders, claim settlement ratio, etc.
