Term insurance plans are one of the most popular forms of life insurance products because of the unmatched benefits they endow. These plansoffer your family a lump sum death benefit in the event of your untimely demise, that too at pretty reasonable premium rates.
The lower premium rates, the benefits offered and variety in payout structure have established these plans asa popular part of everyone’s financial portfolio. However, people still make mistakes and often don’t know what to look and what to overlook while buying a term insurance plan. Due tonot paying enough attention to the facts, individualscommit some very common mistakes while buying term plan.
Below enlisted are few of thecommon mistakes that people make while purchasing term insurance plans:
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Gettinga Low Coverage to Save on Premium Amount
The USP (Unique Selling Price) of terminsurance plans is that they promise a higher sum assured at very reasonable premium rates. However, it often happens that when you people skimp on the cover amount for saving few hundreds on the premium outgo. This is actually a mistake on the customer’s end.
The cover amount should be chosen based on your lifestyle and day-to-day expenses requirement. The chosen sum assured should be adequate to provide for your family’s financial obligations in case you are not around. In case, you are not clear about the coverage amount you would need, you can always take help from online term insurance calculators. They will help you calculate your ideal sum assured level based on the details shared by you and your overall financial profile.
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Choosing a Term Plan with Lower Term
In term insurance plans, the nominees of the insurance holderwill only get the benefit amount in case of the untimely death of a policyholder and only if it happens during the selected tenure of the plan.
Individuals usually commit the mistake of choosing a lower tenure which gives them coverage for a lower period.But, if you want to enjoy maximum coverage under your term insurance plan, you should go for the longest possible policy tenure. A longer tenure means that you will be covered for a longer period of time which also increases the probability of the benefits of your plan being paid.
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Not Providing Complete or Correct Details in the Proposal Form
It generally happens that when we choose to buy a term plan from an agent or broker, we sign the forms without even bothering to check what kind of details have been entered in the proposal form by the broker. Even if, you fill-up the details inthe proposal form yourself, you usually don’t pay attention to or lie about certain details. This is again a mistake on your part.
The proposal form is the very base of your policy contract as your policy is issued based on the details provided by you in the proposal form. In case, you fail to provide correct details or willingly do so, it might jeopardize your claim inthe long run. If the company finds any important piece of information missing from your file at the time of claim submission, it may choose to make your policy null and void. Therefore, make it a point to fill-in the proposal form yourself and not to jeopardise with any details toavoid any discrepancy in the long run.
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Not Comparing Before Buying
Do you know how many term insurance plans are available in the market?Obviously, there are way more many plans than you would have ever thought of.
Every term insurance plan, though similar in appearance, has different features & benefit associated with it. Every plan has different premium amount depending upon its set of benefits & features.
Hence, if you buy a term plan without doing the comparison, there are chances that you won’t end up with the right deal. You would either end up getting a plan with lesser features or with higher premium rates. Therefore, make it a point to do the comparison before buying one.
Not Looking into the CSR (Claim Settlement Ratio)
CSR is undoubtedly one of the most important factors to choose aninsurance provider for your term plan. You should be aware of the fact that whether that provider is reliable or not by looking into its claim settlement ratio.Here, claim settlement ratio is the ratio of approved claims to the total number of filed claims.
In simple words, if you know the CSR, you get to make a better decision while choosing the provider and finally the term insurance plan.
Check features and benefits of SBI Life eShield Plan– SBI Life online term insurance plan
In a Nutshell:
Term insurance plan is an important ingredient of your financial portfolio and therefore, should be purchased only after careful consideration. You should try your best to avoid the aforementioned mistakes if you are looking forward to get a worthy experience in exchange of your hard-earned money. Some extra efforts, a little research and proper knowledge will help you get the best bargain. Your final selection will not only provide you with sufficient coverage but would be reasonable on your wallet, too.