Expert tips to avoid common mistakes while buying insurance

The higher the sum insured amount, the higher the coverage and vice versa. Some insurance products allow maturity benefits, while some, death benefits.  

However, choosing the right insurance product might seem to be pretty overwhelming, irrespective of the type of insurance you need. You need to make your choice wisely and smartly.  

Common mistakes to avoid while buying an insurance product 

To ensure a safe and wise purchase of any insurance product, you need to be critical and smart to enjoy optimum benefits. Some of the common mistakes that you need to be careful about include: 

1. Delays:  

Sometimes, too much thinking can lead to unnecessary delays, eventually leading to loss. This often happens in the case of life insurance. You must note that life insurance is a guaranteed method to secure the financial future of your family. No age is too early for it. On the contrary, the earlier you purchase, the better.  

2. Improper information:  

For any insurance product you purchase, you need to provide certain critical information about yourself during plan issuance. This includes your names, address details, bank account details, health status, etc. Any false or incomplete information may cancel your application. If any information is discovered to be incorrect during claim settlement, it may lead to claim rejection.  

3. Relying only on group insurance:  

Most of the companies nowadays offer insurance coverage as a part of employer benefits. However, never make the mistake of relying solely on such group insurance plans. These plans cease to cover you once you leave the concerned organisation or after your retirement. Moreover, the coverage extent of such plans often proves to be insufficient. Therefore, you must maintain a personal cover of your own to ensure sufficient insurance coverage protection in times of need.  

4. Low sum insured plan:  

Buying insurance is tricky as you need to consider the SI amount during the plan purchase. This amount remains unaltered throughout the policy term. Therefore, if you plan to buy a plan with a comparatively low sum insured amount, you cannot enhance it later, and this will lead to low coverage extent. Your entire purpose of maintaining the policy will prove to be in vain if you do not get enough coverage in times of need. 

5. Short-term plans:  

This is yet another common mistake, especially in the case of life insurance. If you purchase life insurance early in life for 25 years at the age of 25 years, you cannot continue your plan for more than 50 years of age. Therefore, you have to plan wisely before making your final decision. 

6. No comparative study:  

Having faith in a single insurance provider is not really a wise decision when buying insurance. Before zeroing in on any one plan, you must compare multiple competent plans offered by several insurers. This will help you to understand the scenario better and aid you in providing a clearer picture regarding the premium payable amount, coverage extent, tenure, types of riders, claim settlement ratio, claim settlement process, etc., of various insurance companies. This will help you in choosing the most befitting plan at the most affordable rate based on your circumstances. 

7. Misunderstandings:  

Any insurance product is usually a mutual contract between the insurer and the insured, maintaining certain pre-determined terms and conditions. Any policy document mentions all the critical details, including all sorts of inclusions and exclusions. Before finalising your choice, you must go through these finer details to understand the plan completely. This is very crucial to avoid any last-minute surprises or misunderstandings during claim settlement.  

8. Not choosing online plans:  

If you are still stuck with buying insurance from an agent, you are surely missing out on several advanced features and discounts that are exclusively available online. With the increasing popularity of e-commerce, the marketing scenario has changed significantly. You can easily make your survey and research several competent plans with each other from the comfort of your home and then make the final purchase.