It is important to buy a term plan for the financial security of your family. However, there are many lenders offering these insurance plans, and therefore, you need to conduct extensive research to make the right choice. Here are some mistakes you should try to avoid while purchasing a term plan.
Hiding important information from the insurer
When you fill the insurance form, you will have to disclose all the information that is important. This means you need to disclose everything about your health, lifestyle, habits, and pre-existing medical conditions to the insurer. If you fail to do so, your term insurance claim could be rejected.
Choosing inadequate insurance cover
Most people tend to choose a cover without considering their annual income, current liabilities, and lifestyle. This will defeat the entire purpose of term insurance. An amount that seems to be sufficient today might not be enough in the next 10 years. You need to ensure that the insurance cover is 15 times your annual income. Consider the income, expenses, and inflation when you buy a cover.
Not reviewing the policy at key stages
This is a common mistake that you should avoid making. Many people buy an insurance plan and forget about it. When you purchase a term plan, it is essential to review it from time to time in order to get the benefits. There could be life-changing events when the cover should be reviewed in order to ensure it is in sync with your current state of living.
Not setting up a premium reminder
If you miss the date of your premium payment and the grace period, the term policy will lapse and this means your loved ones will lose the financial protection in your absence. If you revive it later, you might have to go through a medical test and the premium could also increase. To avoid this, you need to set up a reminder for the premium payment.
Not choosing a comprehensive cover
When it comes to term insurance, it is best to choose a comprehensive cover so as to ensure the complete financial stability of your family in your absence. A comprehensive cover will give you a 360-degree cover against any disability or ailment. It is best to buy term insurance riders on the policy so that you can get maximum coverage in case of disability, loss of income, or accident.
Only considering the cost
Many look for the cheapest insurance plans and do not consider parameters like solvency ratio and reputation of the company. You need to remember that companies who offer the cheapest insurance are not the best. You also need to consider the claim settlement ratio of the company, which will show the number of claims that the company honors each year in order to make an informed decision.
Postponing the idea of buying an insurance cover
This is the biggest mistake you should avoid. It is human nature to procrastinate the idea of buying an insurance cover, but by doing this, you are putting your family at risk. The premium amount is only going to increase with age.
Now that you know the common mistakes that you should avoid, it is best to buy term insurance online from a reliable insurance company.