Awareness is very important while buying term insurance. A wrong decision can lead to financial crisis for the family in future. Therefore, choose the right insurance cover, understand the payment plan, avail riders and choose the insurance company wisely.
People often become careless while buying an insurance policy. They buy insurance with only superficial information, but when the time for claim comes, the insurance companies create hurdles by citing terms and conditions. Then the policyholders realize that they have made a mistake. Given the uncertainties of life, term insurance has now become very important for every person.
Through term insurance, the financial future of the family can be secured at a very low premium. Seeing its importance, people are buying it more. If you are also planning to take term insurance, then it is important to know what important things should be known in advance to take full advantage of the policy.
Term insurance is an effective way to secure the financial future of the family at a low premium. This plan meets the financial needs of the family when the policyholder is not in this world. Therefore, before taking the policy, thoroughly check the claims and conditions of the insurance companies and take a decision only after assessing your financial needs. Today we will tell you about the common mistakes people make while taking term insurance.
Choosing the wrong sum assured
Many people make the mistake of deciding how much sum assured they should take while buying term insurance. As a general rule, a person should buy a term insurance cover 20 times more than his annual income. But often people choose the sum assured without considering their family’s future needs, loans, long-term goals and financial commitments. This can cause financial difficulties for the family in the future.
Mistake in choosing payment option
The claim pay-out plan is the way in which the insurance company provides money to the family of the insured. It includes lump sum payment, monthly income payment and a mixed option of lump sum and monthly income payment. Many people do not choose the pay-out plan seriously, due to which their family may have to face financial difficulties in the future.
Ignoring riders
While taking term insurance, many people do not take additional benefits (riders). These riders provide additional claims in special circumstances. Such as Accidental Disability Rider (assistance in case of disability due to accident), Critical Illness Rider (payment in case of serious illness), Accidental Death Benefit Rider (additional amount in case of accidental death) etc. It is important to choose the right rider according to your needs.
Choosing the wrong insurance company
Most people choose the insurance company only by looking at its claim settlement ratio. However, this method is not completely correct. Some companies show a good settlement ratio by settling small claims, but their record in settling large claims may be poor. Therefore, one should also check the company’s services, customer reviews and complaints.
