Sunday 11 April 2021

Real Mistakes while buying Insurance


 Real Mistakes while buying Insurance

Future is always unpredictable and we may find ourselves in a situation where we will need a life insurance plan. Insurance helps reduce our potential financial loss of hardship. Insurance can also provide your loved ones with a financial payment upon your death. But we need to be very careful while buying insurance.


Whenever you decide to buy your life insurance this is automatically for you and I'm not much of the conflict producing investment consultant and a financial planner this is an attempt to impart financially


Common mistakes people make while buying Life Insurance


Buying Life Insurance Just Because A Friend Or Relative Has An Agency

Many people buy life insurance because a friend or relative is an agent of a life insurance company. You buy life insurance just because a friend approaches you to buy it. Insurance buying is a serious issue of your life and you must know why you buying it. If you buying as your friend is an insurance agent then it’s not a good idea at all. When someone is selling you a life insurance plan, you ought to make sure that you are clear about the reasons for buying it. Don't buy life insurance just because of a friend. Your friend and the company he works for are paid when he sells that particular company’s insurance products to people like you. That’s how he makes money. The more he sells, the more he makes. Friends are lifelines and rightly down insurance is good. But buying life insurance from a friend is usually not a good idea. We being government employees, need to understand that certain things are great on their own but don’t mix well. For example- we like tomato ketchup and we like ice- cream too. But flavored ice cream? NO THANKS!!!


Buying Life Insurance Only To Save On Income Tax

Don't buy life insurance with the only indication of saving tax. One instrument to save the income tax is 80 C but why you need life insurance for it. See for example ELSS schemes of mutual funds also give you the same benefits. So don't buy life insurance only to save on the income. One should not think of saving income Rex as his main aim of purchasing a life insurance policy. Under section 80C, you will find various instruments through which you can avail of a cumulative tax saving of a sizeable amount. We need to stop buying life insurance as a savings strategy.


Buying Life Insurance Just Because It Is Cheap

Buying insurance just because it is cheap not a valid reason. Don't buy insurance because it is cheap to buy insurance only if you need life insurance. You needed to see the plan which is more appropriate for you, not just cheap options. Don't buy life insurance just because it is cheap. The purpose of a life insurance policy is to provide enough finances to go by. However, not all policies payout enough to serve that purpose. Policies that come cheap with low premiums offer a low payout at maturity and that is the last thing we want at the time of financial distress.


Buying Insurance For Short Tenure

While short-term insurance plans have lower premiums, they have numerous shortcomings. Short-term plans usually come with high out-of-pocket costs which often do not cover all essential benefits. When people try to buy life insurance, it’s appeared of 20 years, 30 years, 40 years, 50 years. Insurance can’t be for a few months. It’s for decades. For example, if you take a term plan for 20 years at the age of 25, it will cover you till the age of 45. Now when you buy another insurance policy at 45, you will have to endure an increased cost of premiums. Whenever you're buying a life into this please buy it for a longer day, the retirement date which could not be 60 years of age and ideally up to about 75 years off your age.


Buying Insurance Policy That Is Not Suitable For You 

Buying the wrong type of product, one of the mistakes people often make. Insurance suit your requirements, every person has circumstances, those are different, it may or may not suit them. One should consider age and health conditions while opting for a policy. As we all know, it is expensive to buy a policy as we grow old. You should also consider your financial situation before buying a policy.


Insurance is not an investment

Insurance is more like protection rather than investment. Insurance is to protect your loved ones from the uncertainty of your death and the latter is to accumulate wealth meet goals and earn income. When many people buy insurance they take it as an investment, Agents also keen to guide that you will get that much amount after maturity. But you must not forget that insurance is a protection tool above anything else. Insurance is not an investment, it’s a tool to save you from issues that can hurt your financial goals of life. 


The family must know about your insurance 

If the family is not aware of your insurance, they will not even try claiming them. As the unclaimed amount of over ₹15000 crores was lying with insurance companies. Your family must be able to access such investment. If they know about it, they’ll be able to manage the money. If you have insurance then it must be known by your family members otherwise it’s of no use. If the nominee doesn’t know about the policy then it can be issued. Policy bonds should also be kept safely and in the know of your family.


Avoiding online options of insurance

Purchasing a term insurance plan online has several benefits such as purchase offers, quick process, and similar. Ruling out e-insurance may result in more paperwork and delay in the process. The online option allows you to access your policy from anywhere. It is not only convenient but also gives maximum information at the time of purchase. It saves time and avoids the loss of policy documents.


In a nutshell, we can say that life insurance, if managed well, can give us maximum benefits.

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