Resources
Minus/plus icon
ResourcesExplore the full ACKO experience and make the most of your plan

Home / Articles / Top 7 mistakes to avoid while buying life insurance in India

Top 7 mistakes to avoid while buying life insurance in India

TeamAckoJun 19, 2024

If you're planning to buy life insurance in India, avoiding common mistakes is essential to make informed decisions. Life insurance provides financial security to your loved ones and ensures that they can maintain their lifestyle in case of your untimely demise. However, choosing the wrong policy or making mistakes while buying life insurance can have serious consequences in the long run. Therefore, it's crucial to know the top 7 mistakes to avoid while buying life insurance in India. In this article, we will discuss these mistakes and provide valuable tips to make the right decision for yourself and your family

mistakes

 

Contents

icon
seo_non_core_app_qr

A quick view at what is life insurance

Life insurance is a crucial financial product providing a lump sum to the beneficiaries in case of their untimely demise. In India, life insurance is a popular investment option, with a wide range of policies available in the market. These policies offer different benefits such as protection, savings, and investment, making it a flexible financial product for individuals. 

Life insurance policies also offer tax benefits, making them a popular investment option for many. However, it's important to understand the different types of policies available in India and the common mistakes to avoid while buying life insurance. By making informed decisions, you can ensure that your family's financial future is secure and enjoy life insurance benefits.

Avoid these mistakes while buying a Life Insurance plan

Here is a list of the most common mistakes that people make while buying life insurance in India. Understanding them will help you buy the best life insurance plan as per your requirements.

1. Not understanding your insurance needs

One of the most common mistakes individuals make while buying life insurance is not understanding their insurance needs. It is crucial to evaluate your financial situation and assess your family's needs before deciding on an insurance policy. Ask yourself the following questions.

  • What is your current income and future earning potential?

  • What are your financial liabilities?

  • What are your family's current and future expenses?

  • What is your risk appetite?

By understanding your insurance needs, you can choose a policy that adequately covers your family's expenses and provides financial security in case of your untimely demise.

2. Not comparing policies

Another common mistake individuals make is not comparing policies before making a decision. With so many life insurance policies available in the market, it is essential to compare the benefits, premiums, and features of different policies. Don't settle for the first policy you come across, take the time to research and compare policies to make an informed decision.

3. Submitting false information

When applying for life insurance, it is essential to disclose all information truthfully and accurately. Not disclosing relevant information or providing false information can lead to your policy being rejected or delayed in case of a claim. Be transparent and honest about your medical history, lifestyle habits, and other relevant information to ensure that your policy is valid.

4. Buying too little or too much coverage

Another mistake individuals make is buying too little or too much coverage. It is essential to assess your insurance needs and buy a policy that provides adequate coverage to your family. Buying too little coverage may not be enough to meet your family's needs, while buying too much coverage may result in paying higher premiums than necessary.

5. Not understanding the terms and conditions

Before buying a life insurance policy, it is essential to understand the terms and conditions of the policy. Read the policy document carefully, ask questions, and clarify any doubts you may have. Understanding the terms and conditions of the policy will help you make an informed decision and avoid any surprises later.

6. Not considering riders

Life insurance riders are additional benefits that can be added to your life insurance policy for an extra premium. Riders can provide additional coverage for critical illnessesaccidental death benefit, and disability, among others. Not considering riders can result in missing out on essential benefits that can provide financial security to your family in case of unforeseen circumstances.

7. Not choosing the right insurance company

Choosing the right insurance company is essential to ensure that your policy is valid and your claims are settled smoothly. Before buying a policy, research the insurance company's reputation, claim settlement ratio, and customer service. Choose a company that has a good track record and can provide excellent customer service when you need it.

How to buy the best life insurance plan in India

Buying the best life insurance plan in India can be challenging, especially with so many policies and plans available in the market. Here are some tips to help you make an informed decision and choose your best life insurance plan.

  1. Assess your needs: The first step to buying life insurance is to assess your needs. Determine the amount of coverage you require and the duration of the policy.

  2. Choose the right type of policy: There are different types of life insurance policies available in India, such as Term insurance, Whole Life insurance, Endowment plans, etc. Each policy has its benefits and drawbacks, and choosing the right policy based on your needs is essential.

  3. Check the insurer's credibility: When buying life insurance, choosing a reliable and credible insurance company is crucial. Check the company's claim settlement ratio, customer reviews, and ratings to ensure you're buying from a reputable insurer.

  4. Compare policies: Before buying life insurance, it's recommended to compare policies from different insurance companies. Comparing policies can help you understand each policy's benefits, premiums, and terms and conditions and make an informed decision.

  5. Check the policy features: It's essential to read the policy features and terms and conditions before buying life insurance. Check for features such as riders, premium payment options, and policy renewal terms to ensure the policy suits your needs.

  6. Consider premiums: The premium amount is a crucial factor to consider when buying life insurance. Compare premiums from different insurers and choose a policy that provides comprehensive coverage at an affordable premium.

By following these tips, you can ensure that you buy the best life insurance plan in India that meets your needs and provides financial security to your family in case of your untimely demise.

Frequently asked questions

Here are the answers to the most asked common questions regarding the mistakes to avoid while buying life insurance in India.

Icon

How can I assess my insurance needs before buying life insurance in India? 

To assess your insurance needs before buying life insurance in India, you should consider factors such as your age, income, debts, and dependents. It is also essential to think about your long-term financial goals and what you want your insurance policy to achieve.

What information should I disclose when buying life insurance in India? 

When buying life insurance in India, you should disclose all relevant information to the insurance company, including your age, medical history, occupation, lifestyle habits, and any pre-existing conditions. Failing to disclose such information can result in the rejection of your claim or the cancellation of your policy.

Why is it important to compare policies from different insurance companies before buying life insurance in India? 

It is essential to compare policies from different insurance companies before buying life insurance in India because it can help you better understand the various features, benefits, and costs associated with different policies. Comparing policies can also help you find the best policy that suits your specific needs and budget.

Is it necessary to undergo a medical examination before buying life insurance in India? 

It depends on the type of policy you are buying and your age and medical history. Some policies, such as term life insurance, may not require a medical examination if you are young and healthy. However, if you are older or have pre-existing medical conditions, you may be required to undergo a medical examination before being approved for coverage.

What is the importance of reading the policy documents before buying life insurance in India? 

Reading the policy documents before buying life insurance in India is important because it allows you to understand the terms and conditions of your policy. It also helps you identify any exclusions or limitations in your coverage and any fees or charges that may apply. This can help you to make an informed decision about your coverage and avoid any surprises in the future.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.

icon

Want to post any comments?

icon

ACKO Term Life insurance reimagined

Let's build a perfect life insurance cover for you
Your Name
Your gender
Male
Female
Have you smoked in the past 12 months?
Yes
No
Your age
Your pin code
Your phone number
+91
ARN: L0053 | *T&Cs Apply

ARN:L0072|*T&Cs Apply

quote icon

Check life insurance

quote icon