Once you have a family, one of the prime responsibilities that you take on your shoulders is that of securing their future. To safeguard the future of our loved ones, financial security is of utmost significance. Therefore, you must pay heed to term insurance plans. To understand more about term insurance and how you can use it to secure your family’s future, here is a term insurance guide for you.
What is term insurance?
Term insurance is a type of insurance that includes life cover which offers financial coverage for a pre-determined term or period. It is taken by a person to assist their family with some money in a situation where the person expires. This means in the event of the death of the policyholder before the term plan, the nominee of the policy gets a certain amount of financial aid. On the other hand, if the policyholders survive all through the term, they cannot claim any money.
What is a term plan?
A term plan is a type of life insurance policy. A term plan offers financial coverage for certain tenure. The lump-sum benefit of this can be availed by the nominee as a death benefit if the policyholder expires during that tenure.
Nevertheless, when we buy term insurance, many of us end up committing some common term insurance mistakes, which prevent our nominees from getting the money that they deserve. Here are some of the mistakes discussed below, that you must avoid:
- Choosing a plan for lesser tenure: Many of us make the mistake of choosing a short tenure. If you choose a longer tenure, the money that your nominee will get in return will be more. Assuming that you may die soon and accordingly choosing a lower tenure will not cause many benefits.
- Not providing correct or required details: Many policyholders choose to purchase a term plan from the brokers or agents. They do not even bother to check the details that have been mentioned in the forms and sign them. Therefore, one of the important term insurance tips is to check the form once it is filled, whether it has been done by you or an agent. The proposal form is the basis of the term insurance policy and it needs to have all the correct details. Any wrong information or any missing piece can leave your term plan null and void.
- Not comparing the term before purchasing: There is a heap of term insurance plans that are available in the market. More or less all the term insurance plans look similar; however, you need to understand all the features and benefits associated with them. The prudent idea is to compare the term plans to check the various features that they come with and find out which one is more beneficial for you.
- Not studying the plan thoroughly: You should never make the mistake of purchasing something without knowing about it thoroughly. When it is a term insurance plan, it becomes even more important. From the coverage to the term & conditions, everything should be studied from top to bottom. This will help you get a fair idea of what you are buying and where you are putting your money into.
- Choosing a low coverage: Some people choose a low coverage so that they can save on the premium amount. You must not make that mistake. Although the majority of the term plans promise a higher return of money at a minimal premium amount. However, you must choose a cover amount on the basis of your current lifestyle. The return amount will be given to your family in case you are not around. Therefore, it should be enough that can help your family in a meaningful way.
- Choosing price over coverage: A term insurance sometimes covers critical illnesses along with death benefits. Therefore, if you keep on focusing on the premium cost, you may run at a loss while claiming the other benefits. Therefore, try to take a term plan that is affordable yet covers various types of illnesses.
- Delaying purchasing the plan: Life has always been unpredictable for all of us. None of us thought that a pandemic may hit us in 2020 and we would stay clueless for more than a year. None of us ever imagined that the virus can be a life threat to people that we thought were the fittest. Seeing a situation like that, it is wiser to buy a term insurance plan at the earliest and put a small effort to keep your family financially sound, even when you are not around them anymore.
To sum it up, just a bit of consciousness can keep us away from making a mistake while buying term insurance. To even be sure about the term insurance plan that you are going to invest in, you can visit IIFL Insurance Knowledge Centre . You can compare as well as purchase insurance with ease and assurance.