Though the number of people buying life insurance has increased, many of these people make wrong choices regarding the policy term, payout options and type of policy. This leaves the family and your loved ones vulnerable to claim rejection. Here we will discuss some common mistakes made by people when buying life insurance.
Hiding of Critical Information
Many claimants are often left to fend for themselves when the insurance company rejects their claims on the basis that that crucial health information was not shared when buying the policy. This includes pre existing diseases, lifestyle choices, family medical record or dealing in hazardous occupations. Hiding or lying about this information at the time of buying the policy can lead to claim rejection.
Leaving it for later
There are many young ones who feel buying a life insurance policy is just a waste of money at such a young age due to no perceived risk to life. However, the corona pandemic has dispelled such notions. The longer you stay unprotected, more vulnerable is your family. Cost wise too, there is no money saved. Premiums are often lower for young people rather than older ones who have a higher premium rate for their policies.
Opting for long term policy
There are several insurance companies that offer policy term of 100 years and beyond. They secure the family of the insured for his or her entire life. The policy is also a surefire way of leaving a legacy for the family members. However, rather than falling for such gimmicks, it is better to invest the premium difference in a better yielding equity fund.
Buying short term policy
If long term is a mistake, buying a short term policy is also a mistake. There are many cheap policies that offer coverage till the age of 40s and 50s. However, this leaves the family with no cushion cover after the end of the policy. An ideal policy term is one that covers you until all the debt and financial obligations are fulfilled.
Keeping the family uninformed
Do remember that a life insurance policy is bought for the protection of the family. Thus, it is important that you discuss the details of the same with your parents or your spouse. Policy documents should also be safely kept in a place where they can find it easily. Do remember, these mistakes can be easily avoided with the right know how and care. After all, life insurance is one of the most important purchases that you make for the protection of your family’s future. As with any other purchase, it is always good to avoid the pitfalls that you may easily fall into. Subscribe to our newsletter to help you in making an informed decision regarding the life insurance purchase.