Avoid these common mistakes while buying a life insurance
Life insurance policy is a contract between policy holder and the Insurer to pay an agreed sum to the family of policy holder on death or maturity. Hence, it is absolutely necessary that you avoid making these mistakes, so that the Insurer honors the contract and your family gets the assured sum.
1. Provide complete details while filling the Insurance form:
The primary reason for rejection of an insurance claim is hiding, providing incomplete or incorrect information to the Insurer while taking an insurance policy.
Therefore, it is necessary that you hire an Insurance advisor who would not only help you select the right Insurance policy but will also explain the information required by the Insurer so that you do not make any intentional or unintentional errors on the Insurance form.
2. Hiding facts to avoid loading fees:
Loading is additional premium which an Insurer asks you to pay for adverse health, lifestyle, occupation, etc. Although this additional premium is usually quite low, many people do not disclose full facts to the Insurer to avoid paying loading.
Do note that, the Insurer is ready to offer you a cover despite the adverse issues at a slightly higher premium. Disclosing all the facts and accepting the loading will ensure that your insurance claim do not get denied.
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3. Not comparing policies before buying:
People tend to purchase same insurance policy which a family member, friend or colleague has, without proper research. It is important to know that a insurance policy may have terms and conditions that might suit a particular individual but may not be suitable for you. Hence, you should compare the policies first to select the right plan.
You can compare the policies based on the premium rates, specific inclusions and exclusions of a policy, waiting period requirements, etc. You can also consult an Insurance advisor to assist you in comparing different policies.
4. Delaying purchase of policy:
The benefit of purchasing an insurance policy at a younger age is that your premiums are fixed at a lower cost. However, most of us delay purchasing an insurance early thinking we are young for an insurance and then life happens.
Premiums get expensive with the age and with additional liabilities and responsibilities in life, many of us could not afford having an insurance in life, thus, leaving our families financially unsecured.
5. Taking low cover:
Insurance policy is taken by one with the intention to support their family financially in their absence. The financial support your family may need in your absence could be – the daily expenses, children education, loan repayments, etc.
Not having an adequate Insurance policy defeats the purpose of financial security. You must consider the cost of living at an inflated future price and outstanding debts while deciding the Insurance amount needed. You can also consult an Insurance advisor to assist you in determining the sum assured.
6. Not checking the policy documents:
IRDA mandates a free look period of 15 days for all policies and 30 days for policies sourced through distance or electronic mode. During this period, one should make sure that all the policy documents are received from the Insurance company and you have thoroughly gone through the policy wordings and other details.
Incase, you see any error in details then get that rectified within this period or if you are unsatisfied with the policy benefits then you can cancel it without any penalties.
7. Not keeping your policy documents in safe place:
People do not keep the policy documents in a safe place and usually lose them. We would suggest you keep them in a safe place like a Bank Locker or Safe. Also, nowadays you have the option of using DigiLockers for storing your policy documents.
Lastly, as the policy is ultimately for your family’s benefits, inform them once you have the policy purchased.
