Want the best term insurance plan? Read these 5 warnings first
A life insurance policy is a financial cover for an emergency that could visit a person any time that could lead to an accident and result in a disability, even death. Human life endangered due to natural, accidental or other causes. This is why it becomes essential to have term insurance. Those who understand the danger and want to take action that will safeguard their loved ones from a financial emergency in case of death of the breadwinner, should also know exactly how much insurance is good for them. They, therefore, need to calculate the right amount of life insurance as per their right needs. This process can be confusing and people commit some big mistakes while taking term life insurance policy. As per a simple back of the envelope calculation, irrespective of age, a term insurance taken by a buyer should be at least 20 times of salary.
Director, A&M Insurance Brokers, Sumit Wadhwa told Zee Business Online, ''An individual should seek the help of an insurance agent or broker to get the best cover plan. The decisions are based on financial commitments and dependencies like, children's lifestyle, their education, marriage, retirement planning etc. Therefore, it becomes highly essential to calculate the right amount of life insurance as per the right needs of a person.''
While selecting term insurance that is suitable, here are 5 mistakes that must not be made:
1. Insufficient Term Insurance Cover:
A term policy should ideally be ten times as much as your current income. This may seem like a huge amount, and, therefore, people buy term insurance with coverage that is too little to sustain their family's needs in their absence.
2. Not reading terms and conditions of the term insurance policy:
It is always advisable to read all the schemes related documents carefully before taking any plans. It avoids the chances of misunderstandings in future.
3. Not making use of the internet while picking term insurance policy:
The internet allows you to compare policies of various insurers and this enables the buyer to get the best and most personalised policy. With internet, it is quite easy to make an informed decision.
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4. Not doing a proper analysis of term insurance policy:
Since there are so many players in the insurance market that offer competitive benefits, it would be wise to do a thorough market analysis before you finalize a policy.
5. Selecting a shorter term insurance tenure:
Many a times, in the pursuit of saving money and paying lesser premiums, people buy term insurance for a short period. Thus, instead of benefits, they may incur losses. Understand that term policy is for protection and it offers nothing if you outlive your policy's maturity.
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