Common Mistakes People Make While Buying Insurance and What You Should Always Check Before Taking Policy

Common Mistakes While Buying Insurance

Avoid these errors to get the most from your policy

Buying insurance is one of the smartest things we can do to protect ourselves and our loved ones. Whether it’s health, life, or vehicle insurance, a good policy can give peace of mind during tough times. But many people make some common mistakes while buying insurance that can lead to trouble later. Let’s look at some of these mistakes so we can avoid them and get the best value from our policy.

Not Understanding the Policy Properly

One of the biggest mistakes people make is not reading or understanding the policy details. Many of us just go by what the agent says or what others have bought. But every policy has its own rules, limits, and conditions. It’s important to check what is covered and what is not. If we don’t do that, we might face problems during claim time.

Choosing Insurance Only for Tax Benefits

In India, many people buy life insurance only to save on tax. While saving tax is a bonus, the main aim of insurance is to provide financial support in emergencies. If we only think about tax, we might end up buying a policy that doesn’t even suit our needs. It’s better to choose a plan that gives good coverage first, and then think about the tax benefit part.One should calculate how much coverage is actually needed based on lifestyle, income, and dependents.

Underinsuring or Overinsuring

Sometimes people buy very low coverage to save premium money, which is risky. For example, having just ₹2 lakhs health insurance in today’s time won’t be enough for major hospital treatments. On the other hand, some people buy very high cover without checking if they can afford the premium every year. Both ways are not ideal. 

Ignoring the Claim Settlement Ratio

When choosing an insurance company, people often look at brand name or advertisements. But one important thing to check is the claim settlement ratio  this shows how many claims the company has paid out. A company with a poor ratio might give trouble when you actually need help. It’s always better to go for an insurer with a high claim settlement ratio and good customer reviews.

Not Comparing Different Policies

Many people go with the first policy they come across, often suggested by relatives or agents. But just like we compare phones or cars before buying, we should also compare insurance policies. There are many online tools and websites now that help compare features, premiums, and benefits easily. A little effort can help us find a better deal.

Skipping Regular Policy Review

Life keeps changing – income increases, family grows, expenses rise. But most people never review their insurance needs after buying the policy. It's good to check every few years if the coverage is still enough or if any updates are needed. Otherwise, the policy may fall short when we need it the most.

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