Investments that affect your family’s well-being, such as insurance, require careful planning. When you make prudent financial decisions, it reduces the chance of disappointments in the future. The availability of a term insurance premium calculator enables you to optimize your investment. However, it can get complicated if you are hasty with the decision. Using a term insurance premium calculator gives you an estimate of the sum assured required for your family.
Although the online term plan calculator has simplified buying insurance, you must consider other essential factors such as term insurance comparison, determining your unique needs, and affordability to create a sound financial shield for your loved ones. As a policy buyer, you are prone to making some common mistakes if you are not mindful at the time of purchase.
So, let’s look at the mistakes you should avoid when buying a term plan.
- Inadequate Sum Assured Selection
You buy a term plan to cover your family’s needs under challenging situations. In case the compensation from the policy is insufficient, it will fail to serve its purpose. Therefore, using a term insurance premium calculator is advisable to avoid this mistake.
With the help of an easily accessible online term plan calculator, you can estimate an adequate sum assured. Most insurers provide a term insurance premium calculator on their websites that uses your age, income, occupation to give a suitable figure.
The details from the term insurance premium calculator include policy term, monthly premium rates, total life cover, etc. Generally, you should consider a life cover that is ten times your current annual income.
The financial support in the event of the insured’s demise can give a family enough time to get the finances in order. Without using a term insurance premium calculator, you may not be able to project the amount that would satisfy their needs.
- Choosing the Least Policy Period
The policy period of the insurance plan determines the duration for which your life is covered. When using a term insurance premium calculator, you can choose the period till you wish to remain covered. It allows you to check the different premium rates depending on the policy period and coverage amount.
A misconception among people is that they should buy plans with shorter periods or cheap plans to save money. In the long run, such plans may cost you more than a term plan with an extended policy tenure.
For instance, if you choose a term plan for ten years at the age of 30, you will be without life cover at 40. When you buy a new plan at this age, the premium rates will be more expensive. Not to mention, you may have additional financial responsibilities by that time.
Hence, it is in your best interest to go for a plan with a longer policy period. You can use a term insurance calculator to compare the policy premium rates by adjusting the time frame.
Overestimating or underestimating the coverage for your term plan can be equally troublesome. It will help if you look at the nature of your income to ensure the term plan rates. The affordability to pay the premiums plays a crucial role when getting life coverage.
A term insurance premium calculator can give you a clearer idea of how much coverage is suitable for your income range. A salaried individual and a business person’s financial situation may not be the same. That is where an online term plan calculator can aid your decision.
Furthermore, you should map your significant expenses in the coming years to ensure there is no additional burden on your income due to the term plan.
- Disclosing False Information
Another mistake that people make is incomplete or false disclosure of information. When you buy a term plan, you need to fill in specific details about yourself, including medical issues. In case you fail to provide correct information, thinking it unnecessary, it may lead to claim rejection.
Therefore, be sure to review the information you fill in to avoid any future misunderstandings. The IRDAI also advises policy buyers with guidelines for insurance plan purchase, maintenance, and purchase.
- Not Comparing Plans Online
When someone goes to buy insurance today, there are several different options available to them. Unlike a few years ago, when you had to contact an agent to get the necessary information, you can do the research yourself. Term insurance comparison is beneficial for you as it allows greater control and transparency to the process.
With tools like a term insurance premium calculator, it is more convenient to compare different term plans. You may find varying term plan features and benefits at preferable rates. Depending on your particular financial requirements, you can make a well-informed decision.