With the covid-19 pandemic wreaking havoc, the most basic thing you can do is to secure the financial health of your loved ones by purchasing a life insurance policy. The motive behind having a life insurance policy goes beyond protecting one’s financial health. It is about the family’s financial protection in case of the sudden death of the breadwinner, meeting long-term and short-term financial goals like child marriage or higher education, retirement savings etc.
In this piece, we take a look at the four major mistakes one must avoid while buying a term life insurance.
Non-disclosure of critical information
It is very important to disclose all the crucial information for the smooth processing of claims. These can include any pre-existing medical condition, family medical history, risky lifestyle choices like smoking and engaging in hazardous occupations. Santosh Agarwal, CBO-Life Insurance, Policybazaar.com said, “At first, it may seem that not disclosing such information will result in a lower premium. But if your death is traced back to a health condition that suffered at the time of buying the policy. The insurance company has the right to refuse the claim resulting in an undesirable situation. Hence, be truthful and transparent in your declarations.”
Not checking claim settlement ratio
One of the most important factors while choosing the insurer is knowing the company’s claim settlement ratio. The claim settlement ratio is a measurement used for assessing the reliability of the insurance company in terms of paying the claims. This will give you peace of mind knowing your death claim if ever it comes will be paid without any hassle to your loved ones. Moreover, the process of the claim settlement should not be tedious and the customer should have a hassle-free experience. The claim settlement ratio also helps in understanding the overall performance of the company. Hence, it helps you in making a better decision when selecting an insurance company.
Not calculating required insurance cover
“Term life insurance plan acts as a blanket of protection and helps you prepare and keep your family financially stable and secured in case of premature death or any other miss-happening. Especially, when you’re the sole bread- earner of the family. You need to Estimate your required cover after a proper need-based analysis. This should not only cover your lost income but also other anticipated expenses like long term goals such as children education, marriage etc. Therefore, getting sufficient cover is necessary,” Agarwal said.
Choosing the wrong policy
There are several term life insurance policies available in the market. To start with, it is important to understand the features of every product available in the market. Know which policy you need, so as to cover your financial liabilities, your situation and what you want to accomplish with your policy will dictate which type of coverage is right for you and your family.
“It’s completely normal being overwhelmed by innumerable choices out there or being unsure about how a life insurance plan can fit into your other financial goals. Speaking with a financial advisor can help you overcome the feeling of uncertainty and help you make an informed decision. It allows you to discuss what is important to you (retirement, paying for a child’s college education, etc.) to ensure you can meet those goals for your family even in your absence,” Agarwal said.