Life Insurance Mistakes | Avoid Common Mistakes Having Policy with Insurance Companies - How Webs

Breaking

Wednesday, March 21, 2018

Life Insurance Mistakes | Avoid Common Mistakes Having Policy with Insurance Companies

Do Not Taking Decision Fast to Get Life Insurance Policy with Low rating Insurance Companies |  First Do Research and Then Decide. 


Life insurance is one of the most important components of every individual's financial plan. However, there are many misunderstandings about life insurance, mainly because life insurance products have been sold in India over several years. We have discussed some common mistakes that insurance buyers should avoid when buying insurance policies.

1. Insufficient insurance claim: many life insurance customers choose insurance coverage or guaranteed amount based on plans that agents want to sell and how much premium they can afford. This is the wrong approach. Your insurance claim is a function of your financial situation, and there is nothing that products are available to. Many insurance purchasers use thumb rules, for example, 10 times a year to cover their income. 

Life Insurance Mistakes | Avoid Common Mistakes Having Policy with Insurance Companies

Life insuranceSome financial advisers say that 10 times your annual income, as it gives your family 10 years of income when you are gone. But this is not always right. Let's say you have a 20 year mortgage or home loan. How will your family pay the EMI after 10 years, when most of the loan is not yet met? Let's say you have very young children. Your family will need to make the most of their children's income, such as their higher education. Insurance buyers must take into account several factors in deciding how much insurance coverage they are suitable for.


· Repayment of all unpaid debts of the policyholder (eg home loan, car loan, etc.).

· After repayment of debts, collateral coverage or amount, there should be surplus funds in order to obtain sufficient monthly income to cover all expenses of the policyholder's living expenses by invoicing inflation

· After repayment of debts and the creation of monthly income, the amount secured must also be adequate to cover the future obligations of the policyholder, such as child education, marriage, etc.

2. Choosing the cheapest policy: Many insurance buyers want to buy cheaper policies. This is another serious mistake. Cheap policy is not good if the insurance company for some reason or otherwise can not meet the requirement of early death. Even if the insurer fulfills the requirement if the claim has been fulfilled for a very long time, the situation of the insured person's family is definitely not desirable. You should look at the metrics such as the requirement settlement factor and the length of the decision to decide the claims of different life insurance companies to choose an insurer that will timely fulfill your obligation to meet your claim if such a disadvantage occurs. 

Data for this indicator for all Indian insurance companies are available on the IRDA annual report (IRDA website). You also need to check online billing for applications, and then just select a company that has good claims.

3. Insurance as life insurance and purchase of an incorrect plan. The common misunderstanding about life insurance is that it is also a good investment or retirement planning solution. This misconception is to a large extent related to some insurance agents who want to sell expensive policies to earn high commissions. If you compare the return on life insurance to other investment opportunities, it simply does not make sense as an investment. If you are a new investor over a long period of time, equity is the best wealth creation tool. Over a period of over 20 years, investments in capital funds through the SIP will result in a housing that is at least three to four times the life insurance plan of 20 years with the same investment. 

Life insurance should always be considered a protection for your family in the event of an imminent death. Investments should be a completely separate consideration. Although insurance companies sell unit-linked insurance plans (LIFIs) as attractive investment products for self-assessment, you should distinguish between the insurance component and investment component and pay attention to what part of your premium is actually given to the investment. In the early years of the ULIP policy, only a small amount is allocated to purchasing units.


A good financial planner will always recommend buying a term insurance plan. The maturity plan is the cleanest insurance type and is a simple defense policy. The term insurance plan bonus is much lower than other types of insurance plans, leaving it to policyholders with a much larger surplus of inquiries that they can invest in investment products such as investment funds that, in the long run, yield a much higher return than the grant or return plans. If you are the policyholder, in some special situations you may choose additional types of insurance (such as ULIP, grant or money return plans) in addition to your timing policy for your particular financial needs.

4. Buying Insurance for Tax Planning: For many years, agents have made it difficult for their clients to purchase insurance plans in order to save tax in accordance with Article 80 C of the Income Tax Law. Investors should understand that insurance is the worst tax-savings contribution. Repayment from insurance plans ranges from 5 to 6%, while the Company's collateral fund, another 80 ° C investment, provides almost 9% of risk-free and tax-free returns. 


The stock-related savings scheme, another 80C investment, in the long run yields much higher net profits. Moreover, the return from insurance plans may not be fully tax-exempt. If the bonuses exceed 20% of the guaranteed amount, then the term structure is taxed in such amount. As mentioned before, the most important thing to consider when it comes to life insurance is the goal of providing life insurance rather than creating the best return on investment.

5. Withdrawal of or withdrawal from life insurance policy before the deadline: This is a serious mistake and compromises the financial security of your family in the event of a missed incident. Life insurance should not be touched until the death of the insured accident has occurred. Some policyholders abandon their policies to meet urgent financial needs, hoping to buy new policies when their financial situation improves. 

[Life insurance] Such policyholders must remember two things. First, mortality is not under the control of any human being. That's why we buy life insurance first. Secondly, life insurance becomes very expensive as the insurance buyer becomes older. In your financial plan, unforeseen funds should be foreseen to cover unforeseen urgent expenditure or to provide liquidity in the financial period in the absence of financial resources.

6. Insurance is a unique task: I am reminded of the advertising of old motorcycles on television, which had a workout line: "fill it in, close it, forget it". Some insurance customers have the same philosophy of life insurance. When they buy sufficient cover in a good life insurance plan from a well-known company, they assume that their life insurance needs are monitored forever. This is a mistake. The financial situation of insurers changes over time. 

Compare your current income with your income ten years ago. Has your income not grown several times? Your lifestyle will also improve significantly. If you purchased a life insurance plan ten years ago based on your income, then the unsecured amount will not be enough to meet the current lifestyle and needs of your family in the unlucky times of premature death. Therefore, you should purchase an additional deadline to cover this risk. Life insurance needs need to be reassessed on a regular basis and, if necessary, you need to purchase any additional amount that is secured.

Conclusion

Life insurance, Investors should avoid these common mistakes when buying insurance policies. Life insurance is one of the most important components of every individual's financial plan. Therefore, life insurance should be carefully considered. Insurance buyers should take precautions against dubious sales that are practiced in the life insurance industry. It is always worthwhile to involve a financial planner who looks at your entire investment and insurance portfolio on a comprehensive basis so that you can make the best decision both for life insurance and investment.

No comments:

Post a Comment