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5 Mistakes To Avoid While Buying Life Insurance

Updated On Jul 01, 2021

Choosing a life insurance policy for your family is a significant financial decision. Hence, it should be done after carefully assessing your current lifestyle needs and future goals and aspirations. Moreover, it would help if you compared different policies offered by various insurers to find an appropriate life insurance plan at affordable prices. 

The following article elaborates on common mistakes that you should avoid while purchasing a life insurance policy.

5 Mistakes To Avoid While Buying Life Insurance

Here is a list of 5 common mistakes that everyone should avoid while purchasing a life insurance policy.

1. Inadequate Sum Assured And Policy Tenure

Buying a plan for a shorter duration with inadequate sum assured is the most common mistake people make. The insurer might offer a lower premium on the shorter-term insurance policy, but the renewal after the policy completion will increase the premium rates. Thus, it is wise to go for a longer-term plan that will offer death benefits for your family by outliving you. Moreover, a low sum assured will defeat the porpoise of the policy by getting exhausted quickly. Hence, you should choose the amount after measuring the costs of your lifestyle and future financial goals. 

2. Delay In Purchasing a Policy

Purchasing a life insurance policy at a young and healthy age will help get higher coverage at low premium rates. Hence, it is preferred not to delay the purchase as the world is full of uncertainties, and as the family’s breadwinner, you must ensure the financial security of your dependents in the occurrence of an unforeseen event. 

3. Filing Incorrect Details

It is advisable to fill in the correct details related to personal, health and financial conditions in the life insurance application form to get the adequate coverage and maximum benefits of your life insurance plan. Moreover, suppose the insurance provider finds out that you hid your pre-existing medical condition, which eventually led to your death. In that case, the claim made by your beneficiary after your demise can be rejected. Thus, you must provide correct details not to mislead your insurer.

4. Buying on Mere Recommendations

Different families have distinct personal and financial needs which a uniform life insurance plan can not fulfil. That is why the insurer offers a customized plan to the life assured that suits their personal needs and financial requirements. Hence, it is advisable not to choose a policy on mere recommendations by your friends, family or acquaintances. Instead, it would be best if you found the right plan after calculating your needs.

5. Not Buying a Policy Online

The online portals and websites make the buying process quick and affordable by removing the middlemen. Moreover, it also offers the opportunity to compare various plans and select the best one for yourself. The excess paperwork involved in the offline mode can be avoided as well. 

Take Away

Avoiding these minor mistakes can help you make a better and more informed financial decision and build a more robust financial safety net for your family. You can even consult a credible financial advisor or an entrusted insurance agent to understand the terms and conditions of policies before purchasing the best one.

Also Read: 

Comparison: Life Insurance vs Term Insurance

What If I Don’t Renew My Life Insurance Plan?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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