With the ongoing inflation prevalent in the present market, ensuring your loved ones’ financial security is one of the most crucial steps. Life is filled with uncertainties, and you must be empowered enough to deal with unpredictable life events. Thus, more people are drawn towards term insurance policies.
A term insurance policy can help provide financial support for the beneficiaries in case their sole earning member passes away untimely. However, purchasing a suitable term plan can sometimes be overwhelming, driving people to make mistakes in selecting the best one for them. Scroll down to find out what mistakes you should avoid while choosing the best term insurance plan for your family.
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What Should You Avoid While Selecting a Term Insurance Policy?
Having a term insurance policy is a great way to secure financially. The death benefit or the sum assured of a term plan is paid to your nominees in case of your untimely demise within the policy period. However, when selecting a term policy, you need to avoid the following mistakes:
1. Opting for Underinsurance
A term insurance plan is purchased to ensure financial security for the potential loss of income in the future. However, when you opt for a plan without considering your required expenses, you will most likely end up purchasing an underinsurance.
2. Delaying to Buy a Term Insurance Policy
Term insurance is a long-term investment plan; the earlier you purchase it, the better. Buying a term plan early can help you get the best policy for your family at lower premium rates. So, the ideal time to buy a term insurance plan would be during your younger years, once you have a stable income.
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3. Purchasing a Short-term Plan
You should always aim for a term insurance plan that covers the maximum number of years of age, thereby covering the potential financial loss once you start to age. Short-term plans may offer you lesser premiums, but you need to renew them frequently, eventually increasing premiums.
4. Focusing on Premiums Only
While considering the premium amounts is important to ensure the plan aligns with your budget, focusing on it can be a mistake. Especially when you are purchasing a plan worth 1 Crore sum assured, you may need to pay a bit extra; however, that can earn you larger benefits than usual.
5. Including Excessive or No Riders
Including riders is a great way to maximise the benefits of a term plan. However, you must ensure you only apply for the essential riders in your plan.
6. Not Checking the Claim Settlement Ratio
Claim settlement ratio is one of the key indicators of an insurance company’s reliability. Thus, you must consider checking it from the official website of your shortlisted term insurance providers before purchasing a plan from them.
7. Not Conducting Constructive Comparisons
A constructive comparison among multiple term insurance providers eventually leads to the best plan. Before purchasing, make sure to compare different term plans from several insurance companies based on coverage and premiums.
8. Not Reading the Terms and Conditions
Every term insurance plan comes with a set of terms and conditions depending on which you and the beneficiaries shall receive the sum assured you are investing for. Hence, going through the terms of a policy is a must.
9. Ignoring the Coverage
Several term insurance plans have their own set of inclusions, exclusions and related limitations when it comes to providing you with coverage. You must consider studying such intricacies to ensure you get the desired coverage to satisfy your family’s financial requirements.
10. Choosing the First Option
Purchasing a term insurance plan without any second thought is your biggest mistake. So make sure not to go with the first option you come across. Before purchasing, go through several plans and ensure they align well with your requirements.
Final Words
To wrap it up, selecting the best term insurance plan for your family requires a close analysis of your needs and financial requirements. However, when opting for a 1 Crore term insurance, you need to be even more cautious since it requires more time and investment than usual plans. Make sure to go through the terms of the plans carefully and evaluate your requirements before opting.