Term insurance is a type of life insurance cover that offers financial protection to the family or the nominee chosen by the policyholder in the event of their death. One may opt for a term insurance policy as it can be less expensive than whole life insurance plans. However, choosing the wrong plan or provider and missing key steps in the policy-buying process can result in inadequate coverage for the policyholder and nominees.

1. Withholding key information
When buying term insurance plans, one must disclose all the relevant details regarding their health, finances, and personal life. For instance, one may be asked to share the following details with the insurance provider:

– Bad lifestyle habits, if any
– Existing health conditions
– Family history
– Annual income

When discussing these details, one should always offer accurate and complete information. The insurance agent or underwriter calculates the premium amount based on this information. So, falsification or incomplete disclosure (even if unintentional) makes the insurance coverage void. If the insurance company suspects anything, they can investigate and trace the death to an undisclosed lifestyle choice or health issue and deny the claim.

2. Not exploring options
The death benefit typically stays the same throughout the term of the insurance policy. But, one can find policies that have different payout structures. For instance, some insurance plans let the family get a portion of the sum assured as a lump sum and the rest of the amount in regular installments. So, before buying term insurance, one should consider different types of plans and their terms to choose the best policy as per their needs.

3. Overlooking online options
Often, online term insurance policies are cheaper than offline options. Further, buying term insurance online may be more convenient than getting a policy in person for the following reasons:

– The process of buying a term insurance plan online is transparent and straightforward. One may only need to provide basic personal details, attach supporting documents, and make the payment.
– Often, there is no agent commission involved in online insurance policy purchases.

If safety is a concern, buying term insurance online is typically considered a safe process. One may still have to practice caution while purchasing a policy online. For starters, one should shop only from a reputed and genuine online insurance provider to avoid falling for scams. It is also important to look the insurance companies on search engines to find their websites instead of clicking on links one receives via email. Links from unknown email IDs could be phishing attacks.

4. Choosing the wrong coverage amount
A term insurance policy would be able to offer adequate financial assistance to the nominees or family only if one chooses the optimal coverage amount to cater to future financial needs. So, when one chooses minimal coverage, it defeats the whole purpose of buying life insurance. Before zeroing in on any insurance plan, one should consider the following:

– Existing liabilities
– Family assets
– Financial needs
– Current expenses and income

Considering these factors is crucial in determining the adequate coverage sum. One can also use an online term insurance calculator to get an estimate of the coverage amount. Ideally, the coverage amount must be ten times the annual income. However, it can vary from person to person.

5. Choosing accelerated riders
When buying an accidental disability or critical illness rider with the basic term insurance plan, one should check with the insurer about the type of rider available with the plan. The riders may be accelerated and not comprehensive, i.e., the rider amount is paid as an advance from the base claim amount. So, if one uses the rider for a specific sum, the base term sum assured will decrease by that amount, and the total payout amount may be insufficient for the nominees later on.

6. Not buying at the right time
When one is young, they may not consider investing in life insurance as they are fit and healthy. But the earlier one buys a term insurance policy, the lower they shall pay annually as well as over the policy term. However, the coverage premium is high now, as the premium amount increases with age. So, planning ahead and buying the policy early can help one save money on premiums.

7. Switching policies without research
Often, one may believe that their current insurance plan no longer works for them. So, they hastily change to a new term plan. Rushing this process could be a mistake. While a new plan may seem to offer additional benefits, it may also be expensive. That’s not all. In the period between buying a new term plan and terminating the existing policy, one is not covered by either policy. So, before switching to a new plan, one should think twice. Ideally, one must consider asking the provider to update the terms in the current policy instead of buying a new one.

Additionally, one must avoid overlooking the fine print while buying term insurance. It is important to understand all the terms and conditions to avoid any unwanted surprises later on. One can always ask the provider questions regarding the insurance documents and get all their concerns addressed before buying a policy.