Insurance policies are schemes that give life and health covers for a pre-decided term. Usually, an insured person buys their own life insurance. And during any unforeseen occurrences, they get the financial benefits from the insurance policy. This financial help protects a family from debt due to high treatment and recovery expenses. And in case of the sad demise of the insured person, the family can gain support from the insured sum.
But there are slim chances that the insurance company cannot pay the insured sum due to some reasons. And other few troubles can also occur due to the insurance purchaser’s oversights. If you are investing in term insurance, there are some things to consider. You can learn from the mistakes people occasionally commit while buying term insurance.
These are the consequential 9 mistakes that you should avoid while buying term insurance:
- Incorrect Personal Information
Errors in filling the policy papers and details are among the most common mistakes. Always ensure to cross-verify your details at least twice before submitting the forms. Incorrect information can be highly troublesome for the family while claiming life insurance policies.
- Improper Consultation
Another great mistake people make in purchasing term insurance is not getting a proper consultation. It would always be best to get advice from an authorized insurance agent. You must never depend on word-of-mouth or social media content that suggests the best term plan. Always ensure the credibility of your policy information and suggestions.
- Overlooking Included Diseases
People often overlook the included diseases in health insurance. So, ensure that our insurance policy covers the maximum number of included diseases. Having the most number of included diseases is one of the major benefits of health insurance. It will increase your chances of getting returns from the term insurance policy.
- Lack of Knowledge in Claim Procedure
There are a few hard claim procedures in some insurance policies. Having a lack of knowledge in these claim procedures before buying term insurance is also a trouble. If you purchase a policy without knowing the claim procedures, you will have trouble in the future. So, to avoid any blunders in the claim process, always know the procedure before purchasing.
- Costly Premium
Insurance premium increases with the increase in benefits. While buying term insurance with high returns and benefits, some people often overlook the premium amount. And later on, they face trouble paying the high premium amounts in time. Any delays or failures in premium payments adversely affect the returns. It can also cause the insurance policy to be defunct.
Sometimes the buyer has to make some cut-offs to compensate for the high insurance amounts. And they will have to compromise spendings on their lifestyle choices. So, always ensure an affordable premium amount.
- Selecting a Shorter Policy Term
If you calculate the premium amounts and benefits, you will understand that long-term plans require lesser investment. So, always ensure that the insurance scheme you are buying has a longer term.
- Low Insured Sum
A great trouble people face in health insurance is a low insured sum. Most medical procedures, treatments, and medicines require very large sums. And if the insured sum is low, then the insurance money will become insufficient. They will have to depend on their savings or other sources in such cases. Such delay in gathering funds for treatment can delay the medical attention the patient needs. And it also causes several other medical consequences.
The same problem exists in life insurance policies also. If the insured person who is the sole bread-winner of the family passes away, the family doesn’t have any income. And if the family has no one else to depend on for expenses, the insured sum must be high. A high insured sum will ensure the family’s sustenance even after such sad happenings.
- A Low Claim Settlement Ratio
A Claim settlement ratio shows the percentage of policy claims approved from the claims raised. Having a higher claim settlement ratio will increase the chances of claim approval. The best term plan will always have more than a 95% claim settlement ratio. You can check the actual claim settlement ratio of an insurance provider from the annual reports of IRDA.
- Co-payment Clause
A co-payment clause is a repeatedly ignored clause in the terms and conditions of a health term insurance. The co-payment clause in health insurance schemes shares the liability of treatments with the insured person. With such a clause, the insured person must pay a percentage of the entire treatment cost. Co-payment clauses are the reason why some insurance schemes have lower premiums. And for want of a cheaper premium, some people might mistakably choose term insurance with a co-payment clause.
Avoiding all these mistakes will secure your family’s financial future. Proper research can help you avoid most of these common mistakes people make while buying term insurance. In today’s modern age, you can get any information with a click of your fingers. Sound online research, along with consultation from established agents, will help you find the best term plan.