5⃣ common mistakes people do while buying "Term Insurance" which you should avoid.
A Thread🧵⤵️
#personalfinance #Investment
A Thread🧵⤵️
#personalfinance #Investment
1⃣. Your insurance cover cannot be decided by any thumb rule:
Mostly u will hear people saying ideal Insurance coverage should be 20 times ur annual income.
But every1 has diff financial goals & different priorities. Here, a thumb rule can never help u with the ideal cover.
Mostly u will hear people saying ideal Insurance coverage should be 20 times ur annual income.
But every1 has diff financial goals & different priorities. Here, a thumb rule can never help u with the ideal cover.
The best way to find ur ideal cover is to find the difference between the amt you owe and the amt you own.
2⃣. Choosing the wrong claim pay-out option:
Remember Sushil Kumar from KBC who won 5 Cr but soon went bankrupt because he was not able to manage the huge sum of money.
Remember Sushil Kumar from KBC who won 5 Cr but soon went bankrupt because he was not able to manage the huge sum of money.
Similarly, this can happen with your family too. In your absence, ur family receives crores of claims and if they are not able to manage it properly then it will of no use.
So choose an appropriate option while opting for term insurance.
So choose an appropriate option while opting for term insurance.
Pay-out options can be of 3 categories:
→ Lump-sum payout option: receiving money in one go
→ Monthly income payout option: claim will be paid monthly to the family
→ Lumpsum + monthly payout ratio: involves some amt to be paid in lumpsum & rest is paid on a monthly basis
→ Lump-sum payout option: receiving money in one go
→ Monthly income payout option: claim will be paid monthly to the family
→ Lumpsum + monthly payout ratio: involves some amt to be paid in lumpsum & rest is paid on a monthly basis
If u think ur family will not be able to manage a huge sum then probably go with the 3rd option where the family will get some amt in a lump sum and the rest will be paid as a monthly payout. This will help the family to manage the money to meet their regular expenses.
3⃣. Not making full use of the riders:
Riders r additional benefits associated with insurance which u can opt for.
For Ex, if u opt for Critical illness rider, then in case of diagnosis of serious illness (listed in policy doc.), insurer will offer an additional pay out to u
Riders r additional benefits associated with insurance which u can opt for.
For Ex, if u opt for Critical illness rider, then in case of diagnosis of serious illness (listed in policy doc.), insurer will offer an additional pay out to u
There are several other riders as well like accidental riders, disability riders, etc, you can opt for any of these according to your preferences
4⃣. Giving more imp to Claim settlement ratio
CSR shows how many claims the insurer has settled within a specific period of time & one of the imp metrics to see but not the sole metric because it has certain limitations.
CSR shows how many claims the insurer has settled within a specific period of time & one of the imp metrics to see but not the sole metric because it has certain limitations.
→ CSR does not include the experience that ur family will face during the claim settlement period.
→ CSR is calculated across all the insurance products like ULIPs, Term Insurance & Endowment plans. So, if u are going for term plan then it might not show the accurate ratio.
→ CSR is calculated across all the insurance products like ULIPs, Term Insurance & Endowment plans. So, if u are going for term plan then it might not show the accurate ratio.
→ CSR does not depict the ticket size of claims whether the ticket size is low or high.
5⃣. Not disclosing every details abt urself in proposal form:
While buying insurance, it is mandatory to fill d proposal form where u “have to” disclose all the details accurately.
If u purposely hide or forget to mention any of the details, then ur claim might get rejected.
While buying insurance, it is mandatory to fill d proposal form where u “have to” disclose all the details accurately.
If u purposely hide or forget to mention any of the details, then ur claim might get rejected.
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