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5 Mistakes to Avoid When Buying a Term Insurance Plan

If you want to have life coverage, there is no better option for you than term insurance. It is one of the cheapest options available and it purely focuses on covering your family in case of your death. Not only is the premium you would have to pay for the policy extremely low, but also the cover amount is very high compared to other life insurance options. Since they are so widely available, there is a steady rise in their popularity. 

While an online term plan has a long list of benefits, for you to get them, you need to buy the right policy the right way. This means avoiding any mistakes in the process of purchasing the policy.

Here a few commonly found mistakes that you should avoid: 

Delaying the purchase

As a young and active working professional, you might be under the notion that it is too early to spend money on insurance products. This notion comes from the assumption that nothing bad is going to happen at a young age. However, you need to know that term insurance rates depend on your health and your lifestyle. As you age, your health is likely to decline and chances of death are higher. As a result, insurance providers are likely to charge you more premium. If you buy at a young age, your premium stays the same during the entire tenure of the policy. 

Getting inadequate coverage 

Term insurance is a financial tool created to protect your family from the financial challenges that arise due to your death. Since, there is no telling when you are going to die, these policies have a longer tenure. However, your family’s financial requirements change over time and you have no way to know what these requirements will be at the exact time you die. To avoid a situation where the cover amount you selected ends up not being enough for your family, you need to be careful at the time you select the cover amount. Make sure you take into account the requirements your family may have decades into the future. 

Giving wrong/incomplete information 

Giving the insurance provider wrong or incomplete information is one of the most commonly found mistakes that people make. A term insurance provider will ask you many questions before going ahead with the process of buying the policy. These questions will be related to your lifestyle, health records, financial situation, etc. These questions are asked so that the insurance provider can offer the right term insurance policy to you for the appropriate price. However, many people choose to hide or give wrong information to get a better deal. This can cause major financial and legal problems in the future. 

Short tenure 

Term insurance is a form of life coverage. In most cases, a lifetime spans around 70 years. Hence, having health coverage that is only valid for as long as 5 or 10 years after you buy it does not make sense.  While it may be cheaper and offer the same cover amount, having a shorter-term almost guarantees that you will never have to make claim. Moreover, if you survive the tenure of the policy, there is no maturity benefit. Hence, you would have to buy a new policy altogether, for a much higher price due to the higher age. 

Instead, you should get a policy that spans for much longer like 30 years or more. This way, you are covered for a longer time and you don’t have to suffer a higher premium at an older age. 

Read the fine print 

In addition, to knowing how to buy, you have to be sure about what you are buying. Many insurance providers let you have a look-in period. This period is essentially the time for you to read the policy terms and conditions clearly. If there is a certain part of the policy that you do not like, this is the stage that you can decide to not buy the policy. If you are confused about certain parts of the policy, contact the insurance provider to clear them. 

When you go to buy term insurance, set a list of parameters that you should check. Along with these parameters, use the above-mentioned pointers for a better buying and policy holding experience.

Emma Murray

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