10 Mistakes People Make While Choosing a Term Plan
A term insurance plan is a kind of a life insurance cover that provides financial protection to the family members or the nominees of the policyholder in case of an unfortunate situation. Since a term plan acts as a financial shield for your loved ones, it is essential to choose the right plan and get the best out of it.
People often face unpleasant consequences due to the mistakes they make while purchasing a term plan. Below mentioned are some of the common mistakes people make while purchasing their term insurance plan.
Purchasing a Term Insurance Plan for a Short Period
It is a prudent decision to purchase a term plan. However, to get the most out of your plan, you must purchase it to cover your maximum age. A short term plan with lower premium charges may attract you, but it is not the correct choice. This is because, after a period of time, you will have to renew your plan, which would lead to higher premium charges.
Delaying the Purchase
Ideally, you should opt for a term insurance plan as soon as you start earning a stable income. It is not a good idea to delay the purchase of the plan just because you are in good health now. Opting for a plan at an early age helps you in getting better coverage at lower premium charges.
Insufficient Sum Insured
A term plan aims at providing financial cover to your loved ones after you are gone. It is based on your current financial status and on factors such as your lifestyle and your children’s education needs. If you are the one who earns the income for your family and you do not choose the correct policy, your family will face issues in maintaining their current lifestyle.
Choosing the First Policy You See
If you are someone who is new to the insurance field, you should not select the first term plan you come across. It is important to do thorough research and comparison amongst the insurance providers regarding the coverage, premiums, etc. before opting for any plan.
Choosing Price over Coverage
A term insurance plan usually covers critical illness apart from the death benefit. Opting for the right plan will provide you with the right sum assured and attractive premiums. The cheapest priced plan may not provide you with a fair amount of coverage or benefits. Therefore, an affordable plan with lesser add-ons is an optimal choice.
Inclusion of Riders
Add-ons are an essential part of the policy in order to get sufficient coverage. A higher amount of riders can lead to higher premium payments, whereas a lower amount of riders can lead to insufficient coverage. It is important to purchase add-ons which you require, any other riders should be waived off in order to make your term insurance plan affordable.
Hiding Important Details
While purchasing a term plan it is important to disclose all the required information. If you hide important information from your provider, you may not get the cover in the future.
Reckless Shift between Plans
Some people upon realizing that their current plan is not working for them, hastily change to a new term insurance plan which may be providing additional benefits at a higher cost. You should always take into consideration the period between shifting from the old to the new plan, during which you are not protected with any policy.
Ruling out Online Insurance
If you purchase a term insurance plan online, you can avail numerous benefits such as quick process, purchase offers and much more. Completely ruling out the purchase of insurance online not only results in more paperwork but also delays the process.
Insufficient Research of the Plan
The term & conditions, coverage, and everything else of the term plan must be studied thoroughly so that you have a clear idea of the plan you are purchasing and how the policy process works. It is important to carry out research on your own and study the plan in detail before opting for any term insurance and getting the best out of it.
The Bottom Line
Now that you have a clear idea about the common mistakes people make while opting for any insurance policy, you must be careful while buying any term insurance plan. It is always a good idea to conduct thorough research and ask among your family and friends before going forward with the purchase.