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Term life InsuranceJuly 8, 2020

Mistakes to avoid while buying Term Insurance Plan online

Term Insurance Plan is a support system that works for your loved ones in your absence. Though it might not support your family from the emotional trauma, at least it can help them financially, so that they can manage their daily expenses and maintain the lifestyle they were having in your presence.

Mistakes to avoid while buying Term Insurance Plan online

Term Life Insurance is a vast product now. It has several variations and customisation available to suit everyone’s needs and requirements. For instance, if you have a medical history, then you can opt for a critical illness rider along with your base plan. With a little extra amount on your premium, you can have additional financial assistance for your treatment without hampering your savings.

Term Insurance Plan is one of the simplest forms of life insurance, but still, people often get confused at the time of buying it online and end up taking a few incorrect steps. So, let us discuss those mistakes to avoid them while planning our financials:

  • Postponing Buying Decision: One of the major mistakes that people do while buying term insurance plan online is delaying the decision and purchasing it in the later years of life at expensive premiums. At a young age, there are fewer responsibilities and health risks, and thus the Term Insurance Plan should be planned as early as possible to enjoy its maximum benefits like low premiums for high sum assured.

The mentioned table shows our average annual premium amount in a different age for ₹2 crore coverage till the age of 70 years:

Policy Coverage Age of Policyholder Policy Term Annual Premium Amount (in ₹)
₹2 Crore 20 years 50 11,800
₹2 Crore 25 years 45 13,216
₹2 Crore 30 Years 40 16,284
₹2 Crore 40 Years 30 29,028
₹2 Crore 50 Years 20 50,740
₹2 Crore 60 Years 10 85,668

You see, there is a pattern of increasing annual premium payable with age. This implies that you should always try to buy Term Life Insurance at an early age to avail its utmost advantages.

  • Opting for Smaller Term: While planning our financials, we try our level best to do cost-cutting from every spent. At times, to save a few pennies people choose a shorter-term period for their term insurance plan. This, in the long term, can make them spent their hard-earned money on buying a new life insurance plan because if you outlive your insurance term, then you’ll either have to renew it or buy a new policy which will be costlier because of your age and health condition. So, it is always advised that buying term insurance plan online you opt for a longer policy tenure.
  • Inadequate Coverage Amount: When you plan to purchase a term life insurance plan for the economic security of your family, you must consider your monthly expenses as per your lifestyle, your debts like a car loan, home loan, any other liabilities, etc. keeping in mind the increasing cost of living and yearly inflation rate. Also, few people get muffed while choosing the sum assured amount because the premium amount increases with coverage amount. Therefore, to save money, people tend to buy insufficient coverage, which in the long term might not serve the purpose of covering the family financially.
  • Now an important question arises that how to calculate the term insurance coverage amount? There are plenty of tools available online like term insurance calculator to estimate the coverage amount that your family would require to survive peacefully in your absence without getting their funds dried up quickly. These term insurance calculators are quite advance; they even include inflation rate while calculating the suitable coverage amount. 
  • False Disclosure of Information: Insurance companies cross-check your health condition and regular habits before issuing the policy to calculate the risk factor. And then accordingly, they decide the premium amount of your term insurance plan. For instance, if you have a habit of smoking and you do not disclose this at the time of buying term insurance plan online and later on in case you have to undergo lung surgery because of smoking habits, then the insurer might not give you any benefit because of the false or non-disclosure of all information. So, it is highly advised that you do not hide anything from your insurer, be it your medical history or your habits because sooner or later, the truth will be served. Then there are high chances of your claim getting rejected due to inaccurate disclosure of information.

Above are a few critical points which can help you choose a better Term Insurance Plan to make yours and your family’s life much more comfortable. You can visit BimaKaro.in to get professional guidance to buy the best policy as per your requirement.

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