A life insurance plan is one of the most important investment avenues in your financial portfolio. A term insurance plan is an important type of life insurance plan. The policy protects you against the risk of death and provides financial security to your loved ones in case of an unfortunate incident. 

What is term insurance?

A term insurance plan is an insurance cover that will cover your life against the risk of death for a specific period. In case of an untoward event during the tenure of the policy, the nominees will receive the sum assured. A term plan offers no maturity payout in case of survival. The plan will act as an umbrella for your family and will keep them financially secure when you are not around to look after them.

Few mistakes to avoid while buying a term plan

When you buy term insurance, you need to ensure that you are making the right decision and create a financial backup for your loved ones. However, you need to make a wise buying decision by avoiding the following mistakes when buying a plan.

• Opting for a short tenure  

Many people aim to save money by paying a lower premium. Doing this will not only destroy the purpose of online term plan but will also result in losses instead of any benefits. You need to understand that the term of the policy is for your protection and it does not offer anything if you outlive the tenure. A long tenure will serve the purpose and will ensure that your loved ones have the financial security they need during your absence. If you only focus on the premium amount and choose a short tenure, term insurance will not serve any purpose.

• Choosing  insufficient cover  

An ideal term policy will require you to choose a sum assured which is ten times your current income. It might seem like a big amount but it will serve the purpose. People who buy term insurance coverage of a small amount will not be able to ensure that the family’s needs are met in their absence. You need to consider your current expenses, lifestyle, and inflation when choosing a sum assured. A high cover will reap benefits in the long-term. 

• Not comparing insurers   

Many insurance providers offer competitive benefits. It is wise to do a thorough research and analyze the products before you make a buying decision. Many people make a huge mistake of not comparing the products and end up regretting their decision at a later stage.

• Not making use of the Internet  

With the Internet, you can compare all the term plans available and make an informed choice. Today, you need not visit different insurers. The Internet has made buying insurance a time-saving process, as you can purchase an online term plan from the comfort of your couch. 

If you want to know how to choose the best term insurance plan in India, you need to avoid the four aforementioned mistakes and do a thorough comparison online before making a decision. 

Paul Petersen