4 Mistakes To Avoid When Buying Life Insurance Policy

The importance of buying life insurance has risen by leaps and bounds after the Covid 19 pandemic. It has caused 4.48 lakh deaths in India so far and stirred medical havoc like never before. Taking countless lives and leaving families in shambles, it targeted the family breadwinner in several cases and disrupted their household after their demise. On the flip side, it has also transformed people's minds about having life insurance. In the second quarter of FY 2021, the life insurance industry saw a 53% quarterly hike in new business premiums with consumers pushing towards life insurance products to cover themselves and their families from the risk of loss of life in the pandemic.

The purpose of getting a Life Insurance policy is to secure the financial future for a family or to safeguard one's life post-retirement. Getting a Life Insurance Policy is a time taking process as several factors weigh in. Since it's a matter that directly affects your and your family's future, it's essential to be careful while choosing the right plan for you. Therefore, you must stay focused on the requirements of your family and choose the best possible option. Below are five common mistakes to avoid while getting a life insurance policy.

1. Maintain Absolute Transparency

Not being transparent with your insurer is the biggest mistake that you can make while getting life insurance. Not disclosing complete information while buying a policy may result in the rejection of claims. Such information includes all pre-existing medical ailments, family medical history, lifestyle choices like smoking and engaging in dangerous professions. Keeping such information hidden from the insurer or submitting false records may also adversely affect claims settlement.

2. Avoid Short Term Policies

People often opt for a short term while getting life insurance. This is due to the fact that insurance policies that cover up to 45-50 years are cheaper compared to policies with a longer-term. The problem with such policies is that the promised safety net for your family expires as soon as the policy ends. This defeats the purpose of providing coverage as long as you are not free of all your financial obligations like managing higher studies for your kids, etc. To lose the breadwinner of the family at such a juncture could expose the family to countless challenges.

3. Carefully Check The Policy Terms

While you are in the process of finalizing a life insurance policy, be sure to carefully go through the policy document. Although this document seems like a lengthy one, most insurers make it a point to mention all details regarding the product in clear terms and a comfortable to understand format. You may also take the help of the contract form to better understand the policy through illustrations, etc. If you find that the product information you received differs from what is mentioned in your contract form, you can return the policy to your insurer and solicit a refund. Please note that you need to return the policy within 15 days if there is any mismatch with the information provided to you.

4. Don't Terminate The Policy Midway

Another common mistake that people make is discontinuing to pay their premium for the full term of the policy. Doing so can cost you dearly as it will terminate your ongoing policy and leave you uncovered for any unforeseen troubles in the future. It's imperative to remind yourself about the relevance of an insurance policy and reiterate it by getting one. If you want to let go of your policy due to financial reasons, several insurers today offer a loaning facility to help policyholder continue their policy.

To conclude, getting life insurance is an important decision in life that requires much research and contemplation. Therefore, it is essential to think clearly and avoid making the above-mentioned mistakes and get a policy that fulfils its purpose completely.