Buying Term Insurance? Avoid these mistakes
You should ease most of your fears now that you’ve opted for term insurance. After all, a term insurance policy offers life insurance. It assures that the lifestyle quality of your family is not affected in the case of the breadwinner’s death. Also, life aims such as child education and property ownership are not affected after getting a term insurance policy. The benefit of term insurance is that it is the simplest coverage. In other terms, the premium you pay is devoted to giving your life insurance.
What Exactly Is Term Insurance?
Term insurance is a kind of life insurance that protects against the danger of early demise. When you get this insurance, you pick the sum insured and the term of the policy. After that, in the event of death within the policy’s term, the sum insured is paid to the candidate.
Term insurance policies often do not offer a maturity benefit. That is, if the insured lives until the conclusion of the policy period, there is no payout. For example, suppose you purchase a 25-year term plan with an amount insured of Rs. 50 lakhs. Hence, a term insurance plan protects the risk on the insured’s life for as long as the plan is in place and all payments are made on time.
Term Insurance Plan Features
Here are some distinct features of term insurance plans that set them apart from other types of life insurance:
- As a pure safety plan, term plans provide the highest sum covered at the lowest cost.
- These plans are available for the long run. Some term insurance provides coverage for up to 85 years.
- If the insured dies during the period of the policy, the whole sum promised is given to the designee as a death benefit, as well as the policy is cancelled.
- Term plans have extra riders that you may add to your policy. Many plans also include riders that provide a broader range of coverage.
Mistakes to Avoid When Getting Term Insurance
- Not Comparing Premiums
The cover sum to premium rate in a term insurance plan is quite high. This is due to the fact that by paying a modest premium, you might have a large sum insured. The rates charged by various insurance providers will be likely to range greatly. As a result, before concluding the plan, it is vital to check term insurance prices from many insurers.
- Seeking a Low Life Insurance Amount
Many of you purchase term insurance policies without assessing the true needs of life insurance. Getting a term insurance policy with limited coverage may not fulfil the goal for which it was bought. It is best to keep your insurance between 15 and 20 times your yearly income. Based on your age, fiscal demands, and family cases, you may need a greater level of coverage.
- Buying for a Lower Tenure
Insurance coverage aims to protect your life goals. Despite your present age, get a term insurance policy that will cover you until the age of 60. Life aims such as kids’ education, home buying, and so on are often met around then. Yet, for late starts or you who may still have fiscal pledges beyond the age of 60, getting a term insurance plan may be vital, even for a longer term. You may quit paying the premium once the debts are fulfilled since they have no maturity worth.
- Buying Late
Buying term insurance might not be on your to-do list if you’re young and single. Your parents may rely on you monetarily, or you may be tying the knot in a few months. The premium you would pay at an early age will be far lower than the cost you will pay later in life. When bought at an early age, you will pay the same price every year for the next 25 to 30 years.
- Not Adding Riders
Aside from the danger of dying early from natural factors, there are hazards in other aspects as well. A handicap reduces one’s earning capability, while a medical problem may also have an impact on your finances. A term insurance policy allows you to add extra benefits known as riders, like an accidental rider, sickness rider, severe illness rider, and so on. Adding these extras to your term insurance plan expands the benefits and offers full coverage.
- Not Trying Different Things
A basic term insurance plan’s death benefit stays constant all across the policy duration. Yet, a few more plans provide rising or reducing coverage. Some policies allow the family to get a part of the cash insured as a lump payment and the remainder in regular instalments. You may even pay till the age of 60 while keeping the coverage for a longer time.
- Filling Out Forms on Your Own
In most cases, you leave the request form to be completed by the insurance company. Going over the request form reveals the facts that the insurers are looking for. It also allows you complete control over the disclosures made in the application. As your life is being covered, you will feel a feeling of ownership after you fill out the form on your own.
- Refusing to Disclose Crucial Data
The insurance company will need you to provide certain details on the request form. Such disclosure will concern your wages and health state, as well as the medical status of your family. It is vital that you fully disclose them when applying. Any non-disclosure might lead to the nominees rejecting the claim, which would defeat the objective of why you obtained the term insurance policy.
- Excluding E-Insurance Options
Buying a term insurance policy online has various advantages, such as buying offers, a rapid procedure, and so on. The absence of e-insurance may lead to more paperwork as well as a delay in the procedure.
Conclusion
When buying term insurance, it is of grave importance not to make any mistakes. This will help you get the best deal possible. You should make an informed decision when it comes to purchasing the greatest term insurance plan. It can be a valuable asset for you and your family.
If you want to learn more about buying term insurance, visit Piramal Finance for related blogs and explore their products and services.