Common Life Insurance Mistakes to Avoid
- Pradeep Pandey, Chief Marketing Officer, Future Generali Life Insurance
Insurance helps you provide financial protection to your loved ones. Keeping this in mind, it is important to make your insurance decisions with care. Here are some common mistakes that you should avoid when it comes to life insurance:
Not finding it important: Some people think that insurance is expensive or simply not required. They believe that they have enough savings or they might simply find it unpleasant to think about their mortality. It is wrong to think that life-risk coverage is unnecessary or can be delayed. The earlier you plan, the better it will be for your family.
Relying only on your employer: While your employer may be generous enough to provide a group life cover, you should not rely on this alone. A job shift will result in leaving you and your loved ones unprotected since the cover terminates on leaving your employer. Your new employer may not offer insurance or may offer an inadequate insurance cover. It is therefore important to buy insurance based on your own needs.
Concealing information: Concealing habits like smoking or lifestyle diseases like high blood pressure or diabetes will result in the insurance company rejecting your insurance application. If you have been told that you will be denied insurance if you reveal such issues, that’s not true. You should work with your insurer and get a quote based on your current health situation. Always get a medical test done before buying the relevant policy so that there are no rejections of claims later based on suppression of information.
Not having adequate coverage: People often buy insurance arbitrarily based on how much premium they are willing to pay. Your insurance purchase should be planned based on your needs and life stage. As a thumb rule, your insurance coverage should be at least 10-12 times your annual earnings. You may also need a separate insurance plan to cover your outstanding debts like home loan, car loan, etc. You may also consult with a financial advisor to help you work out how much insurance you need.
Delay in getting insured: Continued delay can be a costly mistake. As one grows older, one needs to pay more for insurance. For instance, buying insurance at the age of 30 will cost you lesser than buying insurance at the age of 40. Some people delay buying insurance because they do not want to undergo medical tests or simply think they are still young. This is incorrect; you should get insurance cover and be protected without any delay.
Not updating policies: Providing the insurance company with up-to-date information is imperative. If you have moved, you should take some time out to update the contact details on your policy. If your family circumstances have changed, you should update your nominee details without delay. Not updating your insurance policy can be problematic for your family in case of death.
Take out some time and give some thought to your insurance needs. Your beneficiaries will thank you for doing this. If you are completely uninsured, change that today!