Common life insurance mistakes people should avoid

Common life insurance mistakes people should avoid
September 02 09:35 2018 Print This Article

Life insurance would be one of the best options to choose while planning for your future. But it is important for you to avoid these common mistakes made while buying the life insurance.

    • Opting for cheapest policy: Never go for the cheap insurance policies. A cheap insurance policy provider might not be able to provide the full claim for the insured family. Before buying one for you, look for the claims settlement ratio of various insurance companies which could fulfill your claim on time in case an unfortunate situation arises.
    • Taking life insurance as an investment plan: This misconception is mostly due to the agents who sell the insurance policies to earn high commissions. Rather than considering the life insurance as mere future investment, it would be better if you could opt it to protect your family in an untimely death. With the help of a good financial planner , you would be able to choose the right term plan which is the purest form of insurance and straightforward protection policy for your family.

  • Insurance for the purpose of tax planning: until now the agents have made their clients buy the insurance plans so as to save income tax under section 80C. But now the investors have realized that insurance plans are probably the worst type of investment plans. A public provident fund would fetch you with more interest rate than the insurance policy. The returns from insurance plans are not completely tax-free. The life insurance should always be considered for a life cover and not as an investment plan to generate returns.
  • Give-up life insurance policy or withdrawing before maturity: life insurance should never be surrendered before the maturity as it is the financial security of your family in case of unfortunate incidents. Life insurance gets costlier as the buyer gets older.
  • Insurance is a one- time exercise: Before buying a life insurance you should make sure to compare your current income with your next ten years income. Your lifestyles would have been improved and your income would grow several times compared to the ten years back.

Life insurance is one of the most important components of everyone’s financial plans. And thoughtful considerations should be made before buying the suitable life insurance policy. A good financial planner would look at your portfolio of investments and help you in making the right decision for life insurance as well as investments.

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Daniel Mike
Daniel Mike

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