By the time you turn 30, a number of responsibilities fall into your lap. From buying a house to planning for your child’s education, there are a lot of things that require a strong financial base. The big plans and glorious future stand ahead, but it takes only a moment to realise it all can turn upside down if something happens to you. After all, life is unpredictable.
Thanks to the rapidly growing insurance sector, people now have the option to buy insurance plans that can offer a financial safety net to their family in case of their unfortunate and sudden demise.
Among all the insurance options, term plans are considered to be quite popular owing to the low premiums. However, people who are not aware of such financial instruments often end up choosing the wrong option; thereby facing trouble in future.
In this article, we have noted down five such mistakes which people make while purchasing term insurance plans and the ways to avoid them. Read on:
1. Not Buying the Plan Early
When you are young and ambitious, buying a term plan hardly makes it to your to-do list. Even if it does come to your mind, chances are high you will procrastinate it for the next years to come. This is the most common and biggest mistake everyone commits. Contradictory to the belief that you should buy a term plan when you have crossed 30, financial experts advise people to purchase it when you are young and healthy.
By purchasing a term plan early, you not only pay lower premiums but also ensure that your parents remain financially stable if something unfortunate happens to you.
2. Opting for the Cheapest
Most often, term insurance plans don’t offer any survival benefits, except return of premium term plans. Therefore, people are more inclined to go for plans that have low premiums.
However, such cheap options turn out to be restrictive in their offerings and often present a trim version of the policy to attract buyers. Thus, don’t buy a policy just due to low prices, check if the policy is suiting your requirements and then go for it.
3. Purchasing Insufficient Cover
One of the foremost aims of a term insurance plan is to provide sufficient financial support to your family. However, this basic need falls apart if the sum assured turns out to be inadequate as per your family’s future needs.
To avoid such a situation, experts advise that people should purchase a policy that offers a sum assured at least 10 times of their current annual income. Other than that, they should also consider the inflation rate, current debts and future needs before finalising the amount of cover.
4. Not Opting for E-Insurance
Majority of the people in India are so used to traditional offline insurance companies that they reject the option of e-insurance or online insurance without a second thought. They refrain from buying term insurance plans online due to various misconceptions like, it is not trustworthy, less security and no assistance.
Well, it is not true. Purchasing insurance online is as secure as buying it the traditional way. Moreover, when you purchase an online policy; it saves you time, effort and money.
5. Not Comparing the Plans
Many times, people buy term insurance plans without exploring all the options available in the market and end up making the wrong choice. A wise step is to compare all the plans online. Moreover, the price should not be the only factor of comparison. Some other crucial features that define a lucrative term insurance plan are:
- Brand Value of The Insurer
- Duration of the Plan
- Additional Riders
- Claim Settlement Ratio
While all the factors are quite comprehensive, it’s the claim settlement ratio which raises doubts among people. Well, claim settlement ratio, or CSR is used to check how many claims have been settled by the company. This also highlights the chances of your family getting the sum assured without any hassle. At present, Max Life Claim Settlement Ratio of 98.36% is the highest amongst all insurers.
To Sum Up
Read it all? Well, then you know how to go about buying your first term insurance plan without making any blunders. To get more details about term plans, you can also consult a financial advisor or just contact the insurer’s customer care team.
Today, reputable insurers offer a range of term insurance plans catering to the diverse needs of the customers. So, check which one suits you the most and ensure a financially secure future for your loved ones.