Buying a life insurance policy in India is undoubtedly a tough job. With the market overflowing with numerous options and premium plans, deciding on which one is correct for you can become troublesome. Life insurance in India holds many responsibilities towards the families depending on them. Hence, any mistake while selecting a life insurance policy can prove to be problematic later.
7 Mistakes that 99% of people make while purchasing life insurance
The best life insurance policy is the one that gives maximum protection within a minimum time period, with an easy and reasonable premium. A policy like Invest 4G Plan offered by Canara HSBC Orintal Bank of Commerce, protects the future of your loved ones. However, people commonly misinterpret life insurance policies as an investment. This thought creates a negative outlook towards life insurance in India.
Frequently, people make mistakes while choosing the best life insurance policy for themselves. This can be due to the numerous options available in the policy market. Every offer of a premium plan seems better than the previous one. Hence, mistakes are bound to happen.
We will look upon some common mistakes that 99% of people make while selecting life insurance in India. This can be the perfect guide to avoid common errors while making this crucial decision in life.
Most people believe that life insurance can be purchased in any period of your life. To save themselves from additional expenses, people avoid buying life insurance in India at an early stage in their careers. However, this is a false assumption. The more you delay buying a life insurance policy, the extra premium amount you will have to pay.
As you grow older, your life span will shorten. Hence, you will need to pay a larger sum of annual premium instalments. The earlier you buy the best life insurance policy, the lesser amount you pay each time.
2. Relying on insurance policy offered by employers
Every salaried employee is familiar with the life insurance policy offered by the company. Many believe this policy to be enough for their family’s future, in case of unforeseen events. But, it surely isn’t. An amount that is 2 or 3 times your current salary will hardly cover your own funeral expenses and may cover any debts you have left, forget about supporting your family.
Employees must also remember that one job will not last you forever. Once the job is gone, so is the life insurance policy.
3. Fear-borne hasty decisions
When you approach a life insurance salesman, the first sentence they utter is, “What will happen to your family after your demise?” The plan is to create fear in the minds of individuals. So much so, that they buy a policy out of fear.
Now, the individual shaken with fear and stress will buy the heftiest premium plan without a second thought about their own financial status. Payment of the premium becomes tough in such situations. The customer falls into a vicious trap and makes faulty decisions.
4. Not discussing your insurance
Certain individuals prefer to not talk about their financial makings, policies, and investments. Despite this, life insurance in India is one such area where you must let some people know about the amount. This must include the beneficiary, so that they can claim the money after your death.
Other important people that must be informed about the same are your financial advisor, attorney or someone who will act as your estate representative. If you do not let anyone know about the policy, all your money spent for years, goes to ruin.
5. Making a minor your nominee
Yes, you might want to give everything you own to your offspring. Even the sum of your life insurance after your death. But, in case you pass away before your child is an adult, the company cannot issue them or anybody the money.
The long procedure of appointing a guardian begins, putting more burden on the already stressed family. In such cases, you can appoint your spouse or other trusted family members as your beneficiary until your child reaches 18. Some best life insurance policies offer to change beneficiaries at least once.
6. Assuming you won’t get insurance due to medical conditions
It is a common misconception that life insurance of India is not meant for people with medical conditions. However, a policy ensures that everyone gets some benefit. Even if you suffer from medical conditions, there are numerous plans with premiums made for you.
Contact a policy agent that works with a variety of providers to offer you some alternatives. Making this happen may need more work on your part and your agent’s part. It also requires an agent who is experienced in dealing with a variety of medical issues. Although medical conditions and habits of smoking or drinking may reduce the benefits, they do not entirely dissolve them.
7. Choosing the wrong premium amount
This might be the most common mistake made by most customers buying a life insurance policy. While selecting a premium, people either choose one that is too cheap or something way out of their league. The lower the premium, the smaller the coverage – so choosing to pay a very low premium will leave your family with a small insurance payout.
Choosing a costly premium will become a burden on you when it is time to pay it. It is crucial to understand what your financial capabilities are like before selecting a plan. You must separate your daily expenses, large expenditures like child education and savings before deciding on the best life insurance policy.
With life insurance, there are a lot more mistakes that may be made. This might happen either at the time of purchase or while the policy is in effect. Some errors are more common than others. Yet, all of these errors are avoidable. You can ensure that your life insurance performs what it’s designed to do — offer the security your family needs — by avoiding these all-too-common problems.