Term Insurance Mistakes to Avoid

While purchasing something for the first time, you are bound not to check every aspect of the product and make a blunder. But an error you cannot afford to make is while buying a term insurance plan. A mistake can cost your family the sum assured that is meant to secure their future. So, before you skip ahead and purchase a term plan, here are some mistakes you should avoid.

5 Mistakes to Avoid While Purchasing a Term Plan

1.    Short Tenure

Having a short policy term is not bad if you have specific requirements like a mortgage loan. But if you are planning to protect your family from an unfortunate incidence, then you will not benefit from a short tenure. As your cover expires after the policy ends, you have to be mindful of the tenure you are choosing.

2.    Insufficient Sum Assured

When it comes to putting a number to the cover you need, you have to consider numerous things before you finalize the number. The sum assured has to suffice the budget for basic needs, education of your children, expenses of several family members, any debts that your family might have, etc. But if you were to choose an insufficient cover, it would be tough for your loved ones to make ends meet. Thus, it is of utmost importance to work out the expenses your loved ones would need and consider the situation if there is no earning member apart from you.

3.    No Comparison of Plans

It is always advised to compare term plans from several insurers to get the best of all. If you make up your mind to buy only one insurer, you are going to miss something or the other. Comparing insurance policies enables you to understand aspects like the sum assured, tenure of the plan, premium quotes, riders, premium payment frequency, etc. and purchase the one that if the most beneficial to you.

4.    Offline Purchase

Many policyholders find online purchasing of term insurance plans risky and confusing. But the aspect that they fail to see is that online mode eliminates the commission. If you buy a plan via an agent, you also have to pay the commission of the agent. Hence, you end up saving some money by switching to an online method.

5.    Skipping Riders

Insurance riders are add-ons that maximize your coverage and provide you with extra benefits. But many policyholders skip buying riders to save up on money or because such incidences will never affect them. Though insurance riders will increase your premium, it will not completely go in vain as you cannot predict the future. Under certain riders like critical illness and accidental death, you are eligible for a lump-sum payout. Thus, you should consider getting riders that will secure your family.