Top 5 mistakes to avoid when buying life Insurance

Purchasing a life insurance policy is one of the first steps towards financial independence. However, if not done correctly, you may end up with a policy that is insufficient and unsuitable for your needs. You may be settling down into a false sense of security, which could jeopardize all other plans you have for your life.

 

On the other hand, purchasing a life insurance plan is not always an easy task. As you not only have to buy a policy that meets your specific insurance needs, but you also need to ensure that its premium, coverage, and tenure are within your financial means. So, if you are looking forward to buying a good life insurance policy, here is a list of five major mistakes to avoid.

 

Not reading the terms and conditions

It\'s ironic that people will spend hours finalizing the details of a long-weekend vacation. but will fail to read the terms and conditions when purchasing life insurance. This section typically contains intricate details such as: 

• Policyholder’s rights and responsibilities

• Charges, fees, and other costs

• Exclusion clauses

• How to File a Claim

• Conditions under which claims can be denied

• Implications in the event of death/disability

So it\'s important for you to read through it carefully and make sure you understand it.

Not paying attention to coverage

People frequently purchase insurance without assessing their protection needs, resulting in insufficient coverage. Hence, to avoid being under-insured or over-insured, your insurance coverage should be based on: your age, income, the number of dependents you have, their ages, a logical assumption of future inflation, your financial goals, and your net worth. Additionally, it should ideally provide enough income for the surviving spouse to live on for the rest of their lives and also protect your critical financial goals, such as your children\'s education and higher education, etc.

 

Choosing plans with shorter durations and lower coverage

Most people choose shorter plans or less coverage to reduce their premiums, moreover, such mistakes can end up costing them more in the long run. For example, if a 25-year-old purchases a 10-year plan, it will expire when he is 35. He would have to buy a life insurance policy again, and this time he would have to pay a much higher premium. Furthermore, as you get older, you may develop health problems that raise your premiums or cause you to be denied coverage.

 

Hiding critical information

Many claimants are learning the hard way that insurers reject claims if they discover that the policyholder failed to disclose critical information when purchasing the policy. These can include any pre-existing medical condition, a family medical history, and risky lifestyle choices such as smoking or working in hazardous occupations. Hiding such information or providing fraudulent documents at the time of purchase may result in the claim being rejected. So, to minimize the possibility of a claim rejection later, be truthful in your declarations from the outset.

 

Having too much insurance

An insurance policy is not designed to create wealth, but rather to protect what you have and may need in the future. Just because it is important doesn\'t mean you should go overboard with it. Purchasing an excessive number of life insurance policies without first conducting a thorough analysis of your needs can be detrimental to your finances. 

 

Not buying critical illness cover

A life insurance policy should not be purchased solely to provide financial assistance in the event of death. Instead, it should be purchased with an illness/critical illness rider to cover any life-threatening disease such as cancer, diabetes, or paralysis. When you or a member of your family is diagnosed with a critical disease, you will be able to receive significant financial assistance.

 

By avoiding the aforementioned mistakes, you will find it much easier to obtain a good life insurance policy. After all, insurance is more than just a way to protect your life; it is also a way to protect the future of your loved ones! Hence at BanqMart, we can assist you in determining your protection needs and purchasing appropriate life and critical illness insurance.