Mistakes To Be Avoided While Buying A Life Insurance Plan

Published On Jun 11, 2021 1:55 PM By Shrida Gulati

Investing your money in a life insurance policy is the best decision you can make for yourself and your family members as well. One purchases a life insurance policy to financially protect their family in case of unforeseen death of the sole breadwinner of the family, the claim benefits or death benefits can be used to meet some financial goal such as retirement saving, child’s marriage or education etc. Life insurance is an excellent financial product and you must make an informed decision while purchasing it. 

Mistakes To Be Avoided While Buying A Life Insurance Plan

For you to make an informed purchasing decision, below discussed are some of the common mistakes you can avoid while purchasing a life insurance policy:

1. Unclear Purpose of Purchasing Life Insurance Policy

The purpose of purchasing a life insurance policy is to ensure that you and your family members are financially protected, especially your family members;the people who depend on you. The life insurance policy pays out death benefits in case of unforeseen demise of the sole breadwinner of the family. Some people ignore this fact and invest their money in life insurance plans that do not fulfill their requirements. Before purchasing the life insurance policy, recognize your insurance requirements, select the type of plan you want according to your requirements.

2. Miscalculating the Insurance Cover Required

Before purchasing a life insurance policy you must ensure that you choose the life insurance plan that offers the coverage you require. You must ensure that the life insurance provides you adequate insurance coverage and protection round-the-clock. What’s the purpose of life insurance when it cannot fulfil the financial requirements of your family members when they need it the most. Before you purchase a life insurance policy, always inspect your insurance needs by considering your household monthly expense, your parent’s requirements, child’s education and other financial liabilities. You can also calculate the life insurance premium by using premium calculators available online.

3. Avoiding thorough Research on Different Life Insurance Products

There are different categories of life insurance plans available in the market, and before you purchase a life insurance plan you should be aware of all the different categories of the life insurance plans. Life insurance plans can be divided into several categories such as Term Insurance, Unit-Linked Insurance Plans, Endowment Plans, Retirement Plans and Savings Plans. Each and every plan has to offer different features and advantages. You can choose any plan according to your requirements. Knowing about these different types of life insurance plans will help you in making an informed decision.

4. Misleading Low Premium Life Insurance Quotes

Sometimes insurance companies offer life insurance plans with low premiums, what you  are missing out is that with these low premiums comes a lot of exclusion. The insurance company may mislead you with low premiums and the life insurance company may or may not provide you with adequate cover. If you choose to purchase a life insurance plan with low premium rates then you must opt for a trusted life insurance provider who will provide you with adequate life insurance coverage at nominal premium rate.

5. Unaware of the Policy Term

To keep the life insurance policy still in force you need to keep paying a premium on a regular basis. Life insurance premium paying term depends on the type of the life insurance policy you choose to purchase. You must know the premium payment term of your life insurance policy because it will help you calculate the return on your life insurance policy. Though the premium payment term is different for every life insurance plan but must ensure that you know the premium payment term for your life insurance policy so that you pay your premiums regularly and avoid getting your policy lapsed. 

Conclusion

Above mentioned are some of the common mistakes a potential buyer makes before purchasing a life insurance policy. If necessary you recognize your life insurance requirement, calculate the adequate coverage you require, do proper research on different life insurance products, choose an insurance company you can trust and always be aware of policy tenure and what all your life insurance policy will offer.

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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.