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.
