5 Mistakes That Can Ruin Your Life

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Are you looking for a life insurance policy? Or have you bought a policy recently? If so, read on to know about the mistakes to be avoided while purchasing a life insurance policy .

What is life insurance?

Life Insurances are policies that allow financial security to the family members of the insured by helping them fulfill their regular financial requirements such as paying off debts, education expenses etc. People may buy life insurance plans for several reasons so that their loved ones do not have to suffer after they are gone.  As such, a death in the family has a huge impact on the surviving members in terms of emotions as well as finances. In such a situation having a life cover gives the family a certain financial security.

There are some key features of life insurance to take note of before you buy a policy. These features, if not considered, might ruin your life insurance and might not allow you much benefits.

5 Mistakes to Avoid When Buying Life Insurance Policy in India

Below are the list of mistakes to be avoided while you are purchasing a life insurance policy:

  1. Buying a life cover late – Do you know that if you buy a life insurance policy at a young age, it allows you to pay lower premiums. That is because life insurance premium amounts are determined after considering a number of factors including the age and health condition of the insured. So, if you buy life insurance when you are young and healthy, you are less likely to get sick or die. Thus, the insurer will levy less premium on your policy.  Likewise, if you keep postponing your buying decision and your health condition deteriorates, you may not even qualify for life insurance.
  2. Going for a cheap policy – Comparing and buying the best and most cost efficient deal is fine but buying a policy just by its cheap price is not acceptable. This is because, in such cases you will not gain anything in return from the policy and thus will waste all your money in paying premiums. If you have any problem in understanding the terms and condition of life cover policies, it is better to get some understanding from someone with good knowledge and who can guide you about these policies.
  3. Causing Gap in your premium (premium lapse) – You will also ruin your life insurance policy if you allow your premiums to lapse. You are expected to pay premiums regularly to keep your insurance going. Paying late premiums or letting a lapse in your premium might impact the benefits you may accrue by means of your policy. So, if you think you won’t be able to pay the premium on time due to any reason, you should speak with your insurer in advance to find a solution.
  4. Treat insurance policy as an investment – Since most of the permanent life insurance policies allow cash value along with life cover, they serve as accumulated funds for people who want to secure their life with life insurance to augment their retirement income. Thus, allocating the desired amount of money to the policy is important so that it serves the purpose of an investment in the future.
  5. Taking loan or borrowing money from a life insurance policy – If you own a permanent life insurance cover, you might use that account as a source to procure funds if you need money.  Although it serves as a wonderful advantage, but it needs to be managed cautiously. That is because, if you use that account to take out too much money, it might lead to a lapse in the policy and cause you enough trouble. In such a case, even your death benefit to the nominees might also be reduced.

Know More: Documents Required to Buy a Life Insurance Policy in India.

Also, another mistake that many people make is to buy life insurance policies offline. This is because if you buy life insurance online you get numerous added benefits as compared to when buying life insurance offline from agents etc. If you buy policies offline, you might have to pay a hefty commission to the agent for helping you buy the best policy of life insurance. This money is a complete waste that you can avoid by comparing and buying life insurance online.

Conclusion 

As already discussed above, life insurance is crucial for a family’s financial sustenance in the absence of the key earning member. But you must ensure to compare different plans and different types of life insurance covers to find out which policy would suit you.

Further, you would also be glad to know that an insured person can own more than one life cover if you qualify for the same after going through certain medical tests.  So, if you have enough money to pay the premiums comfortably, you can think about buying more than a policy looking at your requirement and the kind of policies that are available.

Here, procuring a permanent insurance policy would allow protection to the policyholder throughout life as well as allow them to amass cash over time for future purpose. This sum can be availed by the insured at the time of maturity if he/she outlives the policy. On the other hand, this is not the case in term insurance. Here, the insured person insures his/her life for a particular period like 15 – 20 years and receive no cash at the end of the term. He/she can expect their nominee to receive the sum assured if the insured dies during the policy term.

Further, even in this case if you buy term life insurance online, you are most likely to receive numerous deals and discounts to benefit better.

Also Read: Assignment vs Nomination in Life Insurance Policy

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Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

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