Availing term life insurance is the first step towards financial security. The term life insurance plan, provides protection to your loved ones, when you are not around. Every working individual should avail term life insurance. On the untimely demise of the policyholder, the entire sum assured (death benefit) is paid to the nominee. This money can be used to give children, a good education and a quality life.
As life insurance provides safety to your family, you should be very careful to choose the best life insurance plan. These are some of the mistakes you must avoid while availing life insurance.
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The main objective of availing insurance is to provide financial aid to your dependents, when you are not around. But, many people consider insurance as an investment and they ignore the fact that insurance is bought for protection (risk cover). Many people just concentrate on the guaranteed returns life insurance provides, at the time of maturity.
It is very important to financially secure your family with a term life insurance plan, which is a pure risk protection plan.
Many people who have just started working and are single, think that they don't need term life insurance as they are healthy. But, if you have parents who are financially dependent on you, not buying a term life insurance may put them at risk.
Buying life insurance might become difficult after you enter your 30s, as expenses increase. Also, your premium will increase once you get older.
Many people buy life insurance just to avail tax benefits. They assume that the life insurance plan they avail will protect their family in case of an unforeseen event. But, this is not true because different life insurance plans serve different needs.
For instance, if you buy an endowment plan to save tax thinking that it will protect your family, this may not be true. Endowment plans provide less mortality cover compared to term life plans. If something untoward happens to you, your family will not have enough money to enjoy current standards of living.
Buying life insurance without doing proper research just to save tax is a big mistake. So, whenever you buy a life insurance plan, it is very important to do proper research and buy a plan which suits your requirement.
To get higher protection, many people opt for riders while availing life insurance plans. You will have to pay an additional premium for these riders. Your insurance cost will go up if you opt for the riders which you don't need. You should pick the riders which you really need.
Many people opt for a shorter term while availing a life insurance plan. You will be covered for a short period of time, If you opt for a shorter tenure. If something happens to you after the completion of the policy term, your family will not get the sum assured.
Suppose you want to avail a new life insurance plan after the completion of the policy term, you would have to pay a higher premium. If you are not in good health it will be difficult to get the life insurance plan. Be Wise, Get Rich.
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