Common Mistakes of Buying Term Insurance which NRIs shouldn’t make

A life policy can protect your family financially after your unfortunate demise. Sum assured chosen at the time of purchase will serve as a death benefit to your family after your demise that will assist your loved ones in repaying debts, covering your children’s educational obligations, or paying for daily living expenses. Thus, one can understand the importance of a life insurance policy. Considering this, one cannot afford to make any mistakes that could jeopardize your family’s financial future. Here are the common mistakes people make while purchasing term insurance plans:

1. Choosing the incorrect type of life insurance policy: If you choose a term life insurance plan, keep in mind that death benefits are only paid if the insured unfortunately passes away during the policy’s term. Term life insurance is the most basic type of insurance and does not provide any monetary benefit to the policyholder. There are some life insurance policies that accumulate cash value but a pure term life insurance plan is not one of them. Your financial objectives and budget will assist you in determining which type of insurance plan you should choose. Whole-life plans are more expensive than term plans. However, it does provide a return on your investment. Term life plans are ideal for covering specific debts, such as loans at a reasonable cost. 

2. Focussing on Life Insurance Costs: If the insured unfortunately passes away as a result of an unexpected incident, loved ones will bear the financial consequences. Focussing too much on the cost of insurance may lead to you purchasing an insurance policy with lower premiums. However, this is a significant mistake if the low insurance coverage is insufficient to fulfil your family members’ needs in times of financial hardship. When buying term insurance for NRI, you want to get the best deal possible while staying within your budget. However, before choosing lower-cost coverage, cutting needless spending may allow you to afford a better plan for your family.

3. Not comparing life insurance premiums: Shopping for term insurance for NRI

 can be daunting because there are so many different companies providing different plans. It is essential to compare policies in order to receive the best deal and benefits. If you want the best coverage for your family, you must first consider all of your alternatives. Obtaining estimates from multiple insurers allows you to compare the benefits and features of different policies. Comparing coverage is important before settling on the best policy for your family’s future financial needs.

4. Insufficient term insurance coverage amount: The face value of the policy is one of the factors used to determine premium costs. The higher it is, the more hefty the insurance policy will be. When you’re managing your budget, it might be difficult to strike a balance between having enough coverage and the cost of the plan. However, inadequate term insurance for NRI

coverage may put your family’s finances at risk. Calculating insurance coverage involves figuring out your financial responsibilities for the future. These might involve your home debt, your child’s schooling, or simply preserving your family’s existing lifestyle. Getting the figures will establish how much coverage is required in the event that you are not present.

5. Shorter policy terms: It is tempting to get shorter-term life insurance because it is less expensive but could be a costly mistake that will leave your family with financial responsibilities they cannot bear. However, choosing a policy term of 10 to 15 years will provide coverage and provide security that loved ones will be cared for if the policyholder dies unexpectedly in the future.

6. Putting off Life Insurance: The best time to buy term insurance for NRI is now rather than later. The younger you are, the lower your premium rates will be, which are determined by your age and health. Delaying life insurance until later in life will result in higher premiums and the possibility of not being able to obtain a plan due to bad health. Financial gurus recommend purchasing a term life insurance plan as soon as you begin earning money. This allows you to obtain affordable coverage at a young age while avoiding lifestyle diseases that may develop as you become older. 

7. Providing False Medical Information: During the application procedure, the insurer will enquire about your health, family medical history, occupation, and medications. They will request your permission to get medical records to verify your answers. You may also need to undergo a medical examination. Hiding facts from insurers may result in claims being denied in the event of the insured’s death. Insurance companies may also deny coverage if they discover that you concealed information throughout the application process.

8. Not buying an insurance policy online: Purchasing a term life insurance plan online is one of the most cost-effective options. Many insurance providers provide substantial discounts for plans purchased online. It is also a great way to compare the many options available from the comfort of your own home.

9. Forgetting the fact Life insurance has an investment component: Life insurance plans come with savings and investing options that can help you build cash value for later on. Nowadays, these insurance policies offer numerous benefits that enable you to create a strong investment strategy for meeting your family’s financial demands. Some of the plans allow you to invest a portion of your premium that can be used as part of your retirement financial plan.

10. Relying too heavily on the employer-provided group insurance benefit: Relying too heavily on employer-provided group insurance benefits could be a costly mistake if they do not provide appropriate coverage for dependents. In most circumstances, the death benefit payout is insufficient to cover your family members’ financial needs. It also means you have coverage until you decide to leave your job.