Life Insurance can be your best companion in your distress and sorrow. Though it has a great importance and demand in human life but there are a lot of misconceptions about life. As the process life insurance services have been sold over the years after years, it is being more popular day by day across the world. Now I am going to discuss about some of the common mistakes. That need to be discussed before you should choose a particular insurance policy.
Now I am going to discuss briefly five key points that should be focused before purchasing any insurance plan.
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Underestimating insurance requirement:
It is widely seen now-a-days many life insurance buyers choose their insurance policy based on the plans their agents want to sell and how much premium they can afford every month. This is obviously a wrong approach. When you choose an insurance plan its requirement will be is a process of your economic condition. Even many life insurance buyers use some specific terms or thumb rules like 10 times annual income for cover.
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Choosing the cheapest policy:
Many insurance buyers prefer to buy cheaper life insurance policies. This is another major mistake. A cheap policy is not always good, if the insurance company for some reason fail to fulfill the demand in the event of an untimely death. Even though if the insurer fulfills the need. It takes very long time to fulfill the claim. In fact it is definitely not an expected situation for family of the insurer. Before choosing you should check the metrics like Claims Settlement Ratio and Duration wise settlement of death claims of several life insurance companies. So that it will honor its obligation in meeting your demand in a timely manner. If such an unfortunate situation arise.
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Treating life insurance as an investment:
Another common misconception about life insurance is that, it is a good investment of retirement planning solution. This misunderstanding has spread widely owing to some insurance agents who like to sell costly policies to earn high commissions. If you carefully compare with returns from other investment options. It simply does not make sense as an investment. A good financial adviser will always suggest you to buy term insurance plan. A term plan is the safest type of insurance with a straightforward protection policy.
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Surrendering life insurance policy or withdrawing from it before maturity:
Life Insurance should never be touched until any uncertain death occurs. As a matter of fact, some policy holders surrender their policy to fulfill an urgent financial need. With the hope of buying a new life insurance policy as their financial situation is going to improve. Such policy holders need to remember two things that mortality is not in anyone’s control and life insurance gets very costly as the insurance buyer gets older. So this trick should be avoided.
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Insurance is a one-time exercise:
Some insurance buyers have philosophy lie once they buy enough coverage in a good life insurance plan. They will from a reputed company. This is a wrong decision. Financial situation of a life insurance buyer can change with time. If you take this decision then in the unfortunate event of your untimely death what will be your family situation?
At the end of the day, you have to think about wisely. That what will be the situation if you die unfortunately? So purchase a life insurance plan and make a right decision.
