Pat yourself on the back if you have finally decided to buy a term plan. You are doing the smart thing. There are some common mistakes which you must avoid though. Read on!
Buying a term plan would be the best gift ever that you buy for yourself and your loved ones. It covers you from the unforeseen situations like death thereby providing the sum assured in lump sum or monthly or a combination of both to your nominee while you peacefully pass away.
But are you aware of the key points to be considered while you buy one? Many of us fall prey to mis-selling of insurance products and then regret not having done a proper research before finalizing on one.
No no don’t worry. I am not asking you to chant some mantras or recite a Hail Mary, Holy Mary before buying a term plan!
Having said that you are interested enough to go through this 2 minutes read, you would get a clear-cut picture of the common blunders you got to avoid while buying a term insurance plan.
Blunders You Got to Skip While Buying a Term Plan
My neighbor Ajay got a term plan in haste and as I said earlier, became a victim of mis-sold term plan. Though a person learns from his own mistakes, let me tell you that I and my entire family learned a lot more from Ajay’s experience.
In this article, I would share some of the common mistakes you can easily avoid while buying a term insurance plan.
1. Don’t delay to buy a term plan
We know you are hale and hearty and young enough to buy yourself a term plan. But let me tell you that delaying to buy one would refrain you from covering any unforeseen risks. To add to it, you would be unfortunate enough to shell out a very high premium too!
We also know that you have just started earning and can easily afford to pay the little chunk every year. So why procrastinate unnecessary when you can buy yourself a term plan at an early age. By doing so, you can avoid struggling for sufficient cover during emergencies with your growing age and also enjoy the benefits of a lower premium.
2. Don’t buy a term plan just for the heck of it
You finally made up your mind to buy a term plan. The best decision you ever took in the entire 25 years! But did you buy one just for the sake of buying? Did you know that you should have ideally bought this with an intention of your family leading a comfortable lifestyle once you are gone?
Did you calculate the amount your family would need for paying off your debts as well as their finances in next 20 years? If you roughly take a figure of say a crore of sum assured, do you think it would be sufficient enough?
So think wisely and then decide about the coverage you would want your family to rely on. Let them lead a comfortable lifestyle and unburden them from your debts, while you smile like a star up above!
3. Don’t buy a term plan for a shorter term
You just committed a blunder by buying a term plan for just 10 years. With an intention to shell out a lower premium, many of us buy a term plan for a shorter term.
For instance, it doesn’t make sense to buy a term plan for 10 years and post completion of 10 years buying another term plan for a higher premium. Because by then your age too increases. A person in his 20s would require a term plan with a higher tenure than the person who is in his 50s.
4. Don’t take a break in between your term plans
Agreed that you realized your mistake a bit late after choosing a wrong insurer or probably realizing that the plan is not really tailor-made as per your requirements. But, as they say, it’s never too late to start something fresh.
Many of us commit a blunder by dropping the current term insurance policy and then opting for a new policy or a new insurer. What happens meanwhile, if an emergency occurs? This could be too dangerous because you remain uninsured with any of the insurance providers.
So, it is recommended to always buy an alternate plan first and then drop the previous plan that you might have been unhappy with.
5. Don’t disclose incorrect information
Filling the proposal form incorrectly or providing incomplete information would cost you a lot more than you might even dream of. Your age, health conditions, smoking habits, other insurance details and medical background are very important to be correct and precise in the insurer’s record.
For instance, if you buy a short term plan at an age of 20 years and fail to disclose the medical conditions assuming you will outlive the policy period. Unfortunately, something goes wrong and the insurance company detects the cause of death due to health conditions, which were not disclosed in the proposal form. During such unforeseen situations, the insurance company would reject the claim and declare the term policy as void or null.
Remember, an insurance company is there to protect your family towards any untoward situations. Therefore, it is very important to disclose accurate information and also fill the proposal form on your own to avoid any rejections of the claim from the insurance companies.
6. Don’t finalize a term plan without comparing it online
Don’t simply rely on one insurer unless you are dead sure about its reputation and claim settlement ratio. Go online and compare the different policies and quotes of different insurers before you finalize on one.
Comparing policies online would fetch you plans with lower premiums with amazing benefits than the other. Ofcourse there are other factors too, that you need to watch out for before finalizing on one plan!
So STOP BEING LAZY and research website like ours (www.coverfox.com) to explore different insurers and finalize on a plan customized as per your requirements.
7. Don’t unnecessary opt for excessive riders
Riders or add-ons certainly enhance the insurance plan. However, buying excessive riders would at times make an otherwise cheaper plan an expensive one without offering better returns.
For instance, a critical illness plan could be bought in a better way than buying it as a rider in your term plan. Besides, understand your requirements and then opt for riders wisely.
8. Don’t forget to inform your family about your term plan
You bought a term plan. Good for you! But did you even bother to inform your family about your purchase? No? Then you are seriously creating a big blunder by not keeping your family informed about the term plan since they may not know how to use the policy if the situation demands.
Therefore, it is important to understand the plan you opted for and then inform your family accordingly. Imagine a situation where you leave this world peacefully without telling your family about the term plan that you had otherwise purchased for their comfortable lifestyle. SAD that your loved ones could not benefit out of your term insurance plan. Isn’t it?
If you keep the above DONT's in your mind, believe me, you would definitely thank me for sharing this very useful gyaan that I had otherwise known because our neighbor Ajay committed a blunder once!
STAY AWAY from these common mistakes and buy a term plan that proves as an asset for your beloved family!