Buying a term insurance plan can feel tricky. Still, it is one of the best ways to secure your family’s future if something happens to you. Many people buy plans without knowing what to check. This often leads to mistakes that reduce the real value of insurance. To avoid such problems, here are five mistakes you should watch for while choosing a term plan.
- Picking Less Coverage
One of the biggest mistakes is choosing a cover that looks good enough today but fails years later. Inflation reduces the value of money. A low cover might not meet your future needs.
How to get it right:
- Multiply your annual income by 10 to 15. This will roughly cover what you would have earned for your family.
- Add your total debts, such as a home loan, car loan, or personal loan. This ensures your family will not carry repayment worries.
- Keep future expenses in mind, such as higher education for children, marriage costs, and elder care.
- Skipping Useful Riders
Riders make your policy stronger. They add cover for risks that the base plan alone may not handle. Without riders, such risks often remain uncovered.
How to avoid it:
- Choose a critical illness rider. It pays a lump sum if you are diagnosed with a serious disease. This can cover medical bills that basic health plans may not fully support.
- Add accidental death or disability riders. These are useful if your job involves travel, machines, or risky conditions.
- Include a waiver of premium rider. If you cannot work because of illness or disability, the insurer will keep your policy active without asking for more premium payments. This keeps your family’s cover safe.
- Hiding Health Details or Habits
Not disclosing health history or lifestyle can backfire. Claim rejection is common if facts are hidden. Many people skip details about smoking or medical issues to save on premiums, but this can risk the entire coverage.
How to avoid it:
- Share your full medical history with the insurer, even if it feels minor.
- Be honest about lifestyle habits such as smoking, drinking, or long-term medication.
- Inform the insurer about any big health change, such as surgery, so your policy stays valid.
- Not Comparing Plans
Settling for the first policy is another mistake. Insurance premiums and benefits differ from one company to another. Comparing helps you get a balance.
How to avoid it:
- Collect quotes from at least three to four insurers.
- Check the claim settlement ratio. A company with 95% or higher shows a better history of paying claims.
- Go through policy terms carefully. Look at premium payment options, length of cover, and chances to increase cover later in life. Also, check the policy’s term insurance age limit to ensure you can maintain coverage for as long as you need.
- Delaying the Purchase
The sooner you buy, the better. Each year of delay increases your premium. With age, you may also face health checks, exclusions, or fewer choices in plans.
How to avoid it:
- Get a term plan in your 20s or 30s when premiums are the lowest.
- Confirm till what age the plan gives cover. Some allow protection until 70 or 80, others stop much earlier. Understanding the term insurance age limit is crucial for long-term planning.
- Ask about renewal or conversion features that can help if you want to extend cover later.
Why the Right Term Plan Matters
A term plan is more than a formality. It is financial protection that supports your family when life changes suddenly. Choosing the right cover, adding useful riders, and being open about your details make the plan effective. Comparing policies ensures you do not miss out on better options.