6 Insurance Mistakes to avoid (It works for Family)

By | 02/03/2018

If you are looking to secure your financial responsibility in the absence of yourself, you must go for the term insurance plan. You must cover yourself with a life insurance policy, which will secure the future of your dear ones and you have to remember insurance mistakes to avoid.

Life Insurance not only to secure your life but also Life insurance bought for many reasons to meet financial goals like Child marriages, Buying a house, Retirement fund etc.

Insurance Mistakes to Avoid

There are some mistakes you must avoid while purchasing a Life Insurance Plan.

Purpose of Buying an Insurance Plan

Many of us buy insurance to save your Tax liability, ignoring the fact that the insurance cover not only saves your Tax but the primary task of the insurance is to protect your family.

Tax saving is the additional benefit to enjoy while buying the Policy.

Also Read: Understand Tax saving options : 80C, 80CCC, 80CCD, 80D, 80U, 80E, 24

Basically for the salaried, how are fully depending upon the monthly salary income, running EMI’s, fully responsible for all financial activities in the family, Insurance Policy secure the family at that time.

First, you ask a question to your self, Why you want to buy an Insurance Policy and If you clearly just go ahead and select the kind of Insurance you want to buy.

Have Complete Knowledge of Policy

Many of you are not aware of the policy, How it works for you, Do you want Life insurance, as well as financial security in the form of refund after the policy, expire, to meet goals like Child education, Buying a House or just need a life insurance no investment in it you must go for term insurance, it will consist of low premium with high sum assured. Policy Holder has the option to pay the premium monthly, Quarterly, half-yearly or annually.

ULIP plans are those plan which gives you both Insurance, as well as investment benefits for the growth and protection, the premium you pay, the small amount, go for securing your life and rest invested into the market for the better return.

Also Read: How salaried employee save income tax legally on CTC ₹ “14 Lakhs”

Calculation of Insurance Cover

Sometimes you got trap in buying a life insurance which provides them high sum assured, you really need the insurance with high sum assured, without calculating the annual premium.

Does that premium you can afford or you really need that much cover at that time?

First Look into the financial Goals which your family required when you are gone.

You need to consider all the expenses of your parent’s retirement, children education, and Marriage, your wife etc. You must calculate the amount and take the cover accordingly.

Is Cheap Premium Policy is the best Policy

I have recently received an Email for buying a Life Term Plan of ₹ 1 Crore for just ₹ 515 per month, at the first shot, there is no issue of ignoring the mail.

Also Read: Received Income Tax Notice? (Learn about It)

Is Cheap Premim Policy is the best Policy ?

No:

There are a lot of other things, which are not fit in your portfolio, like the period of Policy, they will not allow you for your higher age scenario because the chance of death is higher.

These companies claim settlement ratio is very low after your death your family have to suffer a lot and finally due to some clause or section, your family is not eligible for the claim, that’s the reply of the Insurance company.

Read to the documents carefully, before buying the cheaper Policy

Claim Settlement Ratio

There are tons of Company floating into the market which provide Life insurance Plan to their customers, Every Company follows their protocols and available in the market to earn money.

You must aware of the claim settlement ratio by the company which was published on the annual basis by the company into the market.

This claim settlement ratio reveals the buying of the settlement with the claim raised by the customers. You must know whether the company settle the claim at the time or not.

If you knew the claim settlement ratio, you must take better decision while buying your policy.

Also Read: Effect of NPA in Banking Sector

Not telling your Family about your Policy

Telling your family about your Life insurance policy is very important, you must keep the policy documents always with your family members, a recent survey reveals that 72 % of the people do not tell their family members about their policy.

It is very important that your family members have every knowledge of the policy.

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Amit Bansal
Amit Bansal
Hey, Amit Kumar Bansal, the man behind this blog. I always passionate about Taxes, Stock Market. This was one of the reasons why I have chosen the field of account. Blogging was not the coincidence it was a proper decision. The main aim of this blog is to help readers to take an informed financial decision. If you like my efforts kindly subscribe to this blog and also let your friends know about this website by sharing.

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