Buying term insurance online is easy, but small mistakes can cause big losses. Know the 5 common mistakes by avoiding which you can ensure right coverage, low premium and financial security of your family.
In the digital world, where we can even order vegetables from our mobile, buying insurance is also now possible in a few clicks. Especially term insurance is now becoming increasingly popular on online platforms. People are choosing plans directly according to their needs and budget, avoiding the hassle of agents.
You can easily access digital platforms Term Insurance You can decide the right insurance amount by comparing the options. Insurance companies have made this process easier, with paperless policies, faster claim settlements and lower premiums. But, with the online facility, some mistakes also increase which can prove costly for the policy holder later.
Common mistakes you should avoid while buying life insurance
Mistake 1: Choosing a low coverage amount
The most common mistake is underestimating the sum insured. The main objective of term insurance is to provide adequate financial support to the family in the event of your untimely demise.
The biggest mistake many people make when purchasing life insurance is taking too little coverage. For example, some people take a term plan of only ₹20–₹30 lakh, even though this amount is not enough to meet the future expenses and needs of their family. The best approach is to take a coverage of at least 10 times your annual income. That is, if your annual income is ₹ 10 lakh, then you will get approximately 1 Cr Term Insurance Coverage should be taken. This provides financial security and stability to your family even in your absence.
Mistake 2. Delaying in taking term insurance
Many people think that insurance should be taken closer to retirement, because then there will be more responsibilities in the future. But this thinking is completely wrong. The reality is that the earlier term insurance is taken, the cheaper, easier and more beneficial it is.
- Premium is reduced: Your health remains good at a young age, which also reduces the risk of the insurance company. Therefore you have to pay a very low premium. This is why if you take a term plan at the age of 25, the annual premium can be only ₹5000-₹8000.
- Medical conditions are easy: The rules for medical test are also lighter when taking insurance at a young age. You do not have to worry about your insurance being rejected due to any serious illness or health problem.
- Get long term coverage: If you take a term plan early, you can get insurance protection for 30-35 years. This provides long-term protection to your family.
Now imagine, if you take the same term plan at the age of 40, the premium can be around ₹12,000-₹15,000 per year. That means just because of delay you will have to spend double every year. Therefore, it is wise that the earlier you take term insurance, the better and more economical it will be.
Mistake 3: Relying on one plan
If you choose just one plan without comparing, you may face regrets in the future, such as lower coverage, higher premiums or issues at the time of claims. Therefore, it is wise to study all the options thoroughly before taking a decision. Here are some important things you should keep in mind
- Compare the plans of different insurance companies, this will help you choose the best plan according to your need and budget.
- Check claim settlement ratio and customer reviews. Claim settlement ratio tells how many claims a company has settled. If a company’s ratio is 95% or more, it means it is trustworthy.
- Compare cover, premium, and riders The cover amount, premium, and riders are different from company to company. Riders like critical illness rider or accidental death rider make your term plan more robust.
Mistake 4: Not giving accurate information to the insurer
When people buy term insurance, they often hide important information related to their health and lifestyle in the greed to reduce the premium. Doing so is not only unethical, but can also be extremely dangerous for the future of your family.
Which information should never be hidden:
| type of information | Example |
| health condition | Diabetes, Heart Disease, Asthma, Thyroid, Cancer etc. |
| medical history | Surgery, hospitalization, regular medication |
| Lifestyle habits | Smoking, Alcohol, Drugs |
| family medical history | genetic disease, family history of heart disease or cancer |
| occupation and risk | Hazardous or high-risk jobs such as mining, chemical plants, aviation, etc. |
Mistake 5: Not reading the terms and conditions while buying a term plan
Term insurance is a long-term commitment in which you pay premiums for years with the assurance that your family will be protected when the need arises. But if you do not read the policy terms carefully, sometimes the claim may get rejected – that too just because you had incomplete information.
Whenever you buy any insurance, make sure to check the following points:
- Cover commencement date
- Claim Process
- Nominee adding process
- Exclusions (What’s not covered)
- Health declaration details
It has become very easy to buy term insurance online, but it is equally important to take a wise decision. If you avoid these five common mistakes, you will not only be able to choose the right plan but will also be able to provide true financial security to your family.