Five things to avoid when you buy term plans

Posted by Jessy Jose on May 2nd, 2018

A term insurance plan is the best way to insure your life. This is simplest form of insurance. In this type of insurance, the policyholder pays a premium for a set number of years. If the policyholder does not survive the term of the insurance, their nominee receives a lump sum payment. If the policyholder survives the term of the insurance, they are not entitled to receive any benefits.

If you buy term insurance, you are entitled to tax benefits as well. Life insurance is a great tax savings tool and you can claim deductions on it through a number of sections in the Income Tax Act. So not only is this a great insurance policy but it’s also a great tax saving tool.

If the policyholder survives the term of the insurance, they are not entitled to receive any benefits. It is very important that you know all the terms and policies of a term plan before you opt into it.

When you buy term insurance, there are certain things that you should always avoid. Here are some of them.

1. Buying insufficient cover: Your term insurance should be a sufficient for your dependants to survive on, it should pay for any debts that you have and even for any big expenses like higher education. Buying insufficient cover, just because the premium is low is a big mistake that any who want to buy term insurance.
2. Buying too may additional riders: When you buy term insurance, you can also choose to buy additional riders like accidental disability or critical illness riders. Buying a few riders is advisable, but buying too many riders for your term insurance can prove to be too expensive for no reason.
3. Opting for a short term: You should keep in mind that you will receive no benefits if the you survive the term of your insurance plan. Your term insurance should cover you for a large part of your life. Buying a term plan just for a few years is a mistake that you should avoid.
4. Not comparing: In this new age, you should always buy a term plan online. This is because you can get so many options and compare them in one place, when you shop for insurance online. If you’re already purchasing everything else online, then why not buy a term plan online as well.
5. Not reading the offer document: When you buy any type of insurance, not just term plans, you should always ready the offer document. It is very important that you know all the terms and policies of a term plan before you opt into it.