The world is full of uncertainties. No one can anticipate what will happen in the future. In this context, term insurance can play an important role in financial planning. It offers financial support to dependents so that they can live comfortably and with dignity even after the death of the policyholder. But while purchasing a policy, people often make some mistakes that lead to financial losses.
Here is a list of common mistakes people make while buying a term insurance plan:
1) Insufficient cover: The objective behind buying a term insurance policy is that in case of the sudden demise of the policyholder his or her family can lead a comfortable life. While buying a policy, always decide first on how much sum assured you need to settle for. But many people choose the low cover. The rule of thumb says that one should buy cover of at least 15-20 times the annual salary.
2) Shorter policy term: It is a common mistake that people make while choosing a term plan. Experts are advised that policyholders should opt for coverage for the maximum term available under the plan.
3) Delayed purchase: Most people make a delay to decide about buying a term policy. But you should avoid this tendency. Experts suggest that one should aim to buy a term plan as early as possible.
4) Incorrect medical information: When you buy a term plan, make sure to disclose all necessary information to your insurance provider. It is very important for the smooth processing of claims.
5) Ignore proper research: Before buying a term policy, it is very important to conduct proper research to understand the claim settlement ratio, sum assured and premium. In addition, one should read policy papers very carefully before finalising one.
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