5 Insurance mistakes that can cost you dearly


At the age of 30, we tend to spend a significant portion of our income on necessities of life, such as family vacations, housing rent, schooling for children, etc. In the midst of all this, we somehow put financial planning at the very end of our priority list, not realizing its importance at that moment, until it is too late. 

However, as the breadwinner of the family, you should not be lighthearted about your family’s financial security. You need to be proactive and take action as soon as possible to protect your loved ones from all unforeseen circumstances, starting with an insurance policy. 

With a policy, in particular life insurance, you can achieve many goals, including the financial security of your family and retirement savings for yourself. Therefore, you should not make mistakes when choosing such a financial product. 

Here are a few life insurance mistakes that should be avoided at all costs.

Postponing your decision

Delaying the decision to buy life insurance “tomorrow” is a serious mistake that can reduce your chances of getting the maximum benefits from your policy. The premium is directly proportional to your age. As you age, the risk in life and health increases, which in turn increases the amount of insurance premium you will have to pay. Thus, a life insurance policy purchased at a younger age offers you extended coverage for a longer period with the payment of the lowest possible premium. Starting early can also help you reach your future financial goals faster.

Avoiding exploring different life insurance products

Before choosing life insurance, you should familiarize yourself with the various life insurance products available on the market and in the assortment of a particular insurance company. For example, accumulative life insurance programs provide protection not only against the risk of death and/or disability but also allow you to increase the funds deposited. With this insurance plan, you can create a significant amount of insurance coverage for a relatively small fee. However, early payments for your purposes under these programs, as a rule, are not provided, apart from insurance payments for “life” risks.

There are also so-called investment insurance programs that allow your premiums to grow much faster than in classic life insurance since most of the premium paid is invested in more profitable financial instruments. These programs can help you meet your financial goals, such as saving for your child’s college education or housing. In addition, some of them allow you to partially withdraw the accumulated funds before the end of the insurance period.

Thus, by knowing about the various life insurance offers, you can make an informed decision about where to invest your money.

Information hiding

Make sure you provide the correct information about your health, occupation, special habits, and any other details that are requested on your insurance application.

Correct filling of the medical history data is important because based on the state of health and the information provided, the insurance company makes a decision on accepting the client for insurance and calculates the insurance premium that will need to be paid under the policy.

Yes, the policy can be cheaper if, for example, you have hidden a disease, your weight, or important points in your profession, but if a lie is discovered, the insurance company will not cover the insured event and refuse insurance payment. In addition, it can be considered fraudulent.

Uncertainty about the due date of insurance premiums

Life insurance requires good financial discipline as it is necessary to pay insurance premiums regularly for many years. At the same time, the terms of the contract do not stimulate its termination. Therefore, you should know in advance the payment schedule for the entire insurance period, and the expected profit on your policy. This information can help you assess your long-term budgetary needs.

The contract with the insurance company may contain a vacation for the payment of premiums. If a person has lost his job, spent too much on repairs, etc. – you can take a break in the payment of contributions. However, this is a temporary solution.

If you want to get rid of any payment schedules and discipline when applying for life insurance, pay attention to contracts with a lump sum payment of insurance premiums when the client pays all contributions in one installment for the entire duration of the contract.

Rosrahuvati is not optimal for fear of pokritta

As practice shows, clients most often determine the insured amount based on the size of the insurance premium: how much is not a pity. As a result, the cost of insurance is not fully justified, and the goal of insurance is not achieved. Imagine a scenario in which your family is applying for insurance coverage after your death, and the amount received is insufficient to meet their financial needs, even for the first time.

Therefore, to avoid any such situation, you must first calculate the appropriate insurance coverage by taking control of financial obligations such as your children’s education and wedding expenses, monthly household expenses, and more. 

You can also calculate your needs effectively using the online insurance calculator available on our website.

Buying a life insurance policy is an important financial decision that you make in your life. Therefore, to avoid any mistakes and purchase a policy that can effectively protect your loved ones in the event of your departure, you must seriously approach this issue. Our financial advisors will answer all your questions and help you not miss important points.

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