Avoid These 4 Most Common Mistakes While Selecting Term Insurance Plan
Term Insurance is a life insurance plan financially supporting the policyholder’s nominee upon their untimely demise. It is a long-term insurance plan that offers income to your family to help them achieve life goals and realise dreams. Since the plan is crucial for obtaining financial security, choosing the right insurance plan is important to get the maximum benefits.
Since the insurance plan you choose impacts your family's quality of life when you are not around, it is crucial to decide wisely. Avoiding common mistakes will ensure the right choice when buying Term Insurance. Let's look at a few common mistakes people make when purchasing insurance and learn how to avoid them.
A general thumb-rule formula when determining the sum assured amount is ‘20 X Your Annual Income.’ However, this thumb rule has some flaws. You must consider several other factors true to your specific needs, including inflation rate, loans, liabilities, children’s education, etc. Every situation is different, and you may have different requirements unique to your financial goals.
If you use this random rule to calculate your sum assured, the chances are that it might not meet your financial requirements in your absence. Hence, avoid relying on this thumb rule when choosing your insurance plan. Choose an insurance plan that provides you with the confidence that your family will be financially protected in your absence.
It's crucial to ensure that the sum assured is sufficient to meet your family's needs, as an inadequate amount could leave them without essential support, rendering the policy ineffective. Such situations often arise due to inaccurate estimations. To avoid this, a Term Insurance plan calculator can be beneficial, as it helps
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