4 common mistakes to avoid when buying term life insurance policy

We all know that life insurance policies are specially curated to provide complete financial protection and stability to our loved ones in our absence. But most of us grapple over choosing the best term life insurance policy. This is mainly because we fail at scrutinizing critical parameters that can have an impact on our decision. Also, with numerous life insurance policies offered by different insurance companies, we are often more puzzled than delighted. Since a life insurance policy will make your family financially independent in the event of an unfortunate situation, you cannot afford to go wrong when making a choice. Here’s throwing some light on the mistakes people commonly make when buying a term life insurance policy:

• Buying too less to replace your income: Your life insurance coverage should be at least 10 to 12 times of your annual income. If you are the sole bread earner of your family, this computation is a mandate. You must make sure that your coverage will allow your spouse and children to maintain their lifestyle comfortably without making any compromises in your absence. Which is why you should use a

term plan premium calculator to make the best decision regarding your coverage amount. The insurance proceeds can also be invested to earn a rate of return that will cater to your family’s day-to-day financial requirements.

• Delaying the purchase of life insurance policy: Life is uncertain and waiting too long to get a coverage increases the financial vulnerability of your family if something were to happen to you. Also, the insurance premium amount increases with age. This is because as you grow older, you are more susceptible to health issues. Sometimes, based on your age and health conditions, you may also be denied a term insurance policy. So, the sooner you buy, the more money you save and the lesser are the chances of rejection.
• Buying insurance for a short duration: While you may be tempted to save money on your insurance policy by purchasing it for a short duration, chances are high that it wouldn’t serve the purpose. For instance, if you buy a policy for a duration which is as short as 10 years, you may actually start facing health issues only 10 years from now. This will increase the cost of your next insurance plan or you may not even be eligible for one if your health conditions are bad. Always aim for an extended duration which will factor in your health and other associated risks in the long run.
• Failing to review your insurance plan: You should occasionally review your term insurance plan to make any alterations if required. This is essential because your lifestyle keeps changing with time. It is important to factor in these variations in order to have a sound financial plan for your family’s future.

A term life insurance plan plays an integral role in determining a secure financial plan. The best life insurance policy is the one that is chosen carefully after studying all the above parameters to ensure that your loved ones are financially independent even in your absence.