Term Plan: Want to get the full benefit of a term plan? Then save yourself from these 5 blunders..

Term plan i.e., term insurance, people often hear its name, or say that people take its benefit. Actually, it is a life insurance that provides insurance safety for a fixed time (like 20-30 years). During this time, if the policyholder dies, then his family gets a fixed amount. This is a great way to secure their financial future. But often people make some common but big mistakes while buying a term plan, due to which the benefit of the policy is reduced. Here we are telling you the 5 most common mistakes that people make while taking term insurance, and which you should avoid at all costs.

1. Taking less coverage than needed

Actually, this is the biggest and common mistake. Many people take a policy with very low coverage only for the greed of a low premium. So, if your annual income is ₹ 10 lakh and you have taken a term plan of only ₹ 30 lakh, will it be enough for your family?

What is the right way?

So let us assume that the coverage of the term plan should be 10 to 15 times your annual income, i.e., if you earn ₹ 10 lakh, then there should be a coverage of at least ₹ 1 crore. Because it is important to take care of needs like inflation, children's education, household expenses, and loans.

2. Running after cheap premiums only

By the way, it is not wise to buy a policy immediately after seeing a low premium. In fact, many times policies with low premiums do not have the necessary features, such as riders (critical illness, accidental death, etc.). Apart from this, the claim settlement rate of companies offering cheap policies can also be low, i.e., there is a high chance of claims being rejected.

What to do?

So in such a situation, you should not only check the premium, but also the company's credibility, claim settlement ratio, and extra benefits.

3. Hiding health and lifestyle information
Some people hide information about their medical conditions or habits like smoking, alcohol, etc., so that the premium can be reduced, but this can prove to be costly later. So if the insurance company finds any wrong information while making a claim, then the claim is rejected, which causes loss to the family.

What to do
So, whatever medical or personal information is asked, complete and correct information should be given. Also, the premium may increase a little, but this strengthens the chances of getting a claim in the future.

4. Buying a policy without comparing

In today's digital age, there are many online platforms where you can compare term plans of different insurance companies, but many people just trust the words of the agent or buy a policy from one company. So maybe you could have gotten a better policy from some other company, with more coverage at a lower premium.

What to do?

So in such a situation, always compare the plans of 3 to 5 companies - according to premium, claim rate, features, and riders. Only then should the right decision be taken.

5. Not reviewing the policy from time to time
You took a term plan 5 years ago, but since then, you got married, had a child, took a new home loan; that is, responsibilities have increased, but if you have not updated your policy, then it will not be according to your needs today.

What to do?

The policy must be reviewed every 3 to 5 years or after any major life change (marriage, child, loan), and if needed, increase the coverage or add riders.

Although term insurance is not just a policy, it is considered a strong pillar of your family's financial security. But if you are careless in this - like taking less coverage, falling for a cheap policy, or hiding important information - then this policy will not work at the time when the family needs it the most. (Note: The news is based on general information)

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