Buying a term life insurance policy is one of the formative steps towards securing a financially safe future. These plans are made with the goal of allowing a policyholder and their dependents to have complete security in times of duress due to unforeseen circumstances. Having a term life insurance policy today is an imperative investment. Keeping these things in mind, the process of choosing a term life insurance policy is often daunting for a new policyholder who may struggle to navigate the complexities and conditions that are within the structure of a standard insurance plan.
Since there is a wealth of options when it comes to term life insurance, one can customise and compare across different policies to choose the one best term plan in India, as suited for their needs. The foremost thing a prospective policyholder must remember to correctly identify the incentives and long-term benefits of any term insurance plan before making their choice. Let us read through the mistakes to avoid while buying a term life insurance policy:
Inadequate Term Cover #1
One of the first things a prospective policyholder should do, is determine their net value as an individual before choosing a coverage under any term life insurance policy. The cumulative figure that one gets when they calculate their net salary and their debt liabilities as a total is called the human life value of a policyholder. It is an essential figure to calculate, as it helps navigate a policy holder through their assets and loans and gives them better visibility in regards to their financial choices.
If a policyholder chooses to proceed with a term plan insurance policy that does not cover and go at least 8 times beyond their human life value, then that coverage sum will fail to fulfil the financial obligations left behind by the policyholder and the added expenses the beneficiaries may fail to meet. This can lead to unnecessary distress.
Shorter Policy Term #2
In the pursuit of choosing an inexpensive term insurance plan that has low premiums, a policyholder may compromise on a shorter policy term that does not cover them for the standard 25-30 years but lesser. This can be an attractive choice at first, but it compromises the main goal of a term plan which is to provide extended coverage for a person till they are much older in life. Hence, it is crucial to do a thorough term insurance comparison before you make your decision.
In the event that a shorter term life insurance policy ends at the middle ages of a person’s lifetime, one may have to invest in a new plan which will have higher premiums due to the age of the policyholder. Hence a person should always choose the best term plan in India that covers them till the financially vulnerable points of their future, such as retirement and even old age.
A detriment of buying term plan insurance at an older age is the high cost of premiums, as a person is most likely to have illnesses or ailments at this age rather than at a young age. Buying a prolonged term life insurance policy in one’s mid-twenties is the ideal decision, as the cost of premiums is significantly less and one can alter their terms of coverage once they have major life developments such as a marriage or a child.
Not Disclosing Existing Health Conditions #4
The premiums on term insurance plans for younger and individuals without any pre-existing medical conditions is lower than that of older and more medically vulnerable people. Hence this often leads to people choosing not to disclose their condition to the insurance providers at the time of purchasing an insurance plan. This is detrimental in the long run, for if the policyholder passes away and their death is determined to have been caused by the aforementioned undisclosed condition, the insurance provider will refuse the claim.
Offline Purchase #5
A prospective policyholder may miss out on many company offers and supplementary incentives on an insurance provider’s website if they choose to restrict themselves to the conventional, offline in-person consultations. Today, many online resources are available for people to compare and purchase term insurance plans and even identify special plan features that they may not have discovered through in-person interactions.
Not Comparing Premium Costs #6
A term life insurance policy is considered as an essential asset, hence they are kept as affordable and accessible as possible. It is a simple insurance instrument which has premiums that can go as low as Rs 600 a month, and are accessible to people from all income brackets. However, one can supplement the benefits of these plans by availing a plan that has a combined premium and tenure benefit which often comes with an added reduction on premium costs. Therefore one should duly compare premiums across different plans before finalizing on their ideal plan.
Not Checking for Customizations Offered #7
One of the more interesting features that one can expect from the best term plan in India apart from its affordability is its flexibility. These customisations can range from the choice of payout method; which can be lump sum or as a staggered income. One should duly choose a premium payment frequency as per their comfort. These are customizations one can avail within the existing structures of the plan, on can select paid riders to their plan.
Different factors such as lifestyle, health conditions, age, and income determine the choice of a term life insurance policy. Therefore it is imperative that one takes these factors into consideration and find the best term plan in India plan early, and with due deliberation.