Mistakes to avoid while purchasing term insurance

Personal finance
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You can claim tax deductions up to ₹1.5 lakhs under Section 80C this tax season by paying term insurance premiums even if you purchase one now.

But here are 3 mistakes to avoid! :point_down:

#1 Miscalculating your cover

Many people rely on a generic thumb rule of 10-15x of annual income. However, your needs & liabilities may differ from the average.

So, it’s better to take into account your age, dependents, tenure, expenses, loans, rent, kids’ education fees, etc.

#2 Confusing insurance with investment

Salesmen might tempt you with endowment plans or ULIPS—which promise investment returns with death benefits. Avoid purchasing them. They’re much costlier than a simple plan.

Neither the returns nor the death benefit is worth the high investment

Instead, take a simple term plan & invest your money elsewhere.

#3 Unnecessarily long cover tenure

You might think that a life insurance plan should be till you die. But that’s obsolete.

By the time you’re in your 60s or 70s—your dependants would be financially stable & can take care of themselves & your spouse.

So spending extra on a long-term plan when you don’t need it doesn’t make much sense.

If you need any help in finding the right tenure, cover & insurance plan for yourself, you can talk to folks at @Ditto_Insurance here :point_down:

2 Likes
2

Isn’t the maximum limit is 20-22x of annual income only or we can ask for more?
@Ditto_Insurance

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When you’re getting term insurance, there are some things you should be careful about:

  1. Get Enough Coverage: Make sure you’re getting enough insurance to help your family if something happens to you.

  2. Pick the Right Time: Choose a term length that works for you. Don’t make it too short or too long.

  3. Compare Different Plans: Look at different insurance plans to find the best one for you.

  4. Don’t Forget Extras: There are extra things you can add to your insurance, like coverage for serious illnesses. See if any of these extras are good for you.

  5. Be Honest: Tell the truth when you’re talking to the insurance company. Don’t leave out important details or make things up.

  6. Read Everything Carefully: Before you sign up, read all the papers and make sure you understand what they mean.

  7. Think About Your Health: Some insurance plans need you to have a check-up. This can help you get lower prices if you’re healthy.

  8. Know Your Options: If you might want insurance for a longer time, look for plans that let you change to a different kind later.

  9. Not Just About Money: Don’t only think about the price. Think about how good the insurance company is and if they’ll be helpful if you need them.

  10. Check Every Now and Then: Your life changes, so your insurance might need to change too. Keep an eye on it and make sure it’s still right for you.