Life is full of uncertainties. You never know what happens next. One minute you are out there living your best life, and the next minute something unfortunate could happen. Most of us are aware of this possibility and are worried about the well-being of our family members in such situations. That is why a majority of people choose to invest in a term insurance plan. However, investing in a term insurance plan requires a lot of research and it isn’t as easy as it looks. Here are a few mistakes people make while choosing a term plan.
- Insufficient term insurance cover
This is one of the most common mistakes that people make. Simply investing in a term insurance plan isn’t enough. You also need to make sure that the coverage amount is enough to sustain your family for a considerable time. While choosing a term insurance plan, the coverage should be 10 to 15 times your annual budget.
- Short policy term
The idea behind a term insurance policy is that it lasts until the age of your retirement. Some people opt for short policy terms. For example, if you buy a term insurance plan for 20 years at the age of 30, it will only cover you until you are 50. 20 years feel like a long duration but when compared to your age, it isn’t enough.
- Not comparing
Sometimes people make the mistake of choosing the first term insurance plan they come across. It is important to do thorough research and compare policies to make sure that you get the best out of the premium you are paying.
- Not disclosing medical conditions
One of the most important requirements of a term insurance plan is that the policyholder needs to be truthful about their medical conditions. People often consider lying about pre-existing conditions since they will have to pay higher premiums. Yes, for a while you will end up paying lower premiums, but if caught, the insurance company has all the rights to deny your claim. In a bid to save some money in the form of premiums, you end up risking the entire future of your family.
- Excessive riders
Yes, add-ons are useful. But if you add excessive riders to your policy, you end up paying a higher premium. And some of these riders aren’t even useful to you. Pick only the riders that are useful to you and leave the rest.
The mistakes mentioned above should be avoided while investing in a term insurance plan.