When it comes to financial security, we should think about protection before profit. If you are going to start, or want to make your first investment then your first stop should be life insurance. Usually, people who are excited to start the investment journey either keep life insurance very low in their investment plan or don’t keep it at all. There are many such habits and thinking of people regarding life insurance, by changing which they can protect themselves and their families and remain in a better position financially.
There are many such mistakes regarding life insurance, which are quite common. Some people think that they do not need it before a certain age and hence do not take insurance. There are some who take insurance even then they do not take the kind of cover. Many such mistakes are made even while taking insurance. If you are also among such people or are going to take an insurance policy, then never make these 6 mistakes.
1. Postpone
The first thought that comes to people’s mind about life insurance is that “I don’t have any problem right now, will take it later.” This thinking hurts you in two ways. First- There is no trust in life, you can fix financial security by taking insurance. If you don’t take it, you increase your problem. Second- The higher your age, the higher will be your term insurance premium. The advantage of taking insurance at an early age is that you can take a policy at a low premium. Also, your chances of getting insurance are higher when the insurance company is confident about your income that you have the resources to pay the premium. In case of ill health, either you will not get insurance or you will have to pay more premium.
2. Not giving correct information
Many people make a terrible mistake regarding their policy, they do not reveal the correct information in it while taking the policy. The insurance company asks you about your health condition, your habits, from which your risk is calculated, if you do not give the correct information and later you have a problem then there is no point in such a policy, which gives you that cover the problem. In such a situation, when you need money, you may not get money at all.
3. Taking Return on Premium
Since it is believed that you do not get any return on premium, people avoid taking the policy. Considering this, some insurance products come with return of premium plans. That is, you pay the premium for the entire term of the policy, you will get the return at the end of the term, but in reality it does not make any sense because after many years, its value will have reduced due to inflation.
4. Instead of having a strong policy, taking a more policy
Taking multiple policies does not mean protection. Taking multiple policies does not mean that you have got protection all around. We often take many smaller policies than what we need for life cover and they do not meet our needs. The sum assured of your life insurance should be as much as your future gold and your current liabilities combined.
5. Choosing the wrong payout on how to get the insurance money
You get many options for how your family will get money in case something happens to you. You can either choose the regular payout, the lumpsum amount payout or can choose between the two. This step of yours decides how your family will get the benefit of your insurance. But you have to keep in mind that if you are choosing regular payout then its value should be maintained. At the same time, if you are choosing payout of lumpsum amount in one go, then that money can be used properly in your family.
6. Life cover not checking properly, or not updating
While taking the policy, you must check how much life cover you are getting. Or if you had bought insurance long back, then with increasing age and responsibilities, it should be seen whether that life cover suits you or not. Your cover should always keep your income and your liability in balance. In some circumstances, you may also have to take a policy with a higher cover. In such a situation, always take your cover keeping in mind your liability.
