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Many Mistakes in Buying Life Insurance

Many Mistakes in Buying Life Insurance

life-insurance

Here are some mistakes that people make when buying life insurance that is starting to grow in a positive direction.

At least this positive symptom is a sign that people are slowly starting to realize the benefits of life insurance.

Due to increasing age and the severity of the work, the risk of death that may be experienced also increases.

Especially those who live in big cities. Because of that, people began to be interested in registering to have life insurance.

Unfortunately, in buying insurance, some people still make mistakes. In cases that occur people do not understand the applicable insurance provisions.

Of course, this is fatal because the benefits to be obtained are not by the expectations of the insured. If you have this, the use of insurance will be in vain. The following are some of the mistakes that are often made when buying insurance.

1. Thinking the Sum Insured is Enough for Living Needs.

These are the benefits that will be obtained from using life insurance. That is, it is very important to know well how much the sum insured will be received by the heirs if at any time there is a risk of death for the insured.

Does the sum insured adequately meet the needs of the heirs or is it far from sufficient?

It should be noted that it is wrong to think that the sum assured for life insurance will meet the needs of the family left behind in the long term.

The fluctuating inflation rate and the increasing need for a living will affect the value of the sum assured.

For that, it must be known how to calculate the sum insured for life insurance.

There are three formulas used to calculate the sum assured: the human life value method, Income Based Value, and Financial Needs Based Value method.

Choose life insurance whose calculation formula is profitable according to you and your family.

2. Fixed on Investment Value, Not Sum Insured

Many life insurance users are more focused on the investment benefits contained in the insurance products they buy and not on the life protection benefits contained in them.

While in investment, the value of the investment can go down and also has a fairly high risk.

If the premium payment is based on the investment results, the amount of coverage received may not be optimal, especially when the investment value has decreased significantly.

Cases such as the average experienced by customers who buy unit-linked life insurance.

For that, choose pure life insurance aka insurance without including investment benefits. This is better for those of you who want to feel the benefits of insurance as a whole.

Regarding investment, you can do it by investing money into several instruments. One of them is by utilizing deposits.

3. Meaning Life Insurance Gives Self Protection

Not everyone needs life insurance. Because this insurance has benefits for the heirs only, namely those who are the dependents of the insured.

This means that the sum assured is only given to the heirs. Yes, the insured who does not receive the sum assured?

So, don't buy life insurance if the self-protection or the sum assured is what you expect.

4. Misinterpreting the Insured in the Policy

The insured in the life insurance policy are those who are the backbone of the family/people who have dependents.

That is, if he dies, his family will lose their breadwinner. Anyone who works and makes more money in the family should be insured under life insurance.

There is no need to buy life insurance for those who are not breadwinners, such as wives, children, or parents who are no longer working.

5. Expecting Maximum Profit from Unit Link Life Insurance

Many people start using life insurance because of the benefits of investing in it. The insurance they buy is certainly unit-linked life insurance.

They assume that they are investing and get the benefits of life insurance protection at the same time as the investment.

The assumption is not wrong, but the benefits of insurance and investment are less than the maximum. Why? Because when you pay insurance premiums, the premiums are automatically divided for insurance and investment.

It's a good idea to buy pure life insurance so that the maximum coverage benefits are obtained.

6. Buying a Rider at the wrong time

Buying enough additional insurance is not a problem if it turns out to be necessary. However, what if it turns out that this rider was bought at the wrong time? The benefits you want to feel are not felt. Redundant, isn't it?

Rider fees are quite expensive. So it is very important to consider it carefully. No need to buy a rider that is not needed. For example, critical illness insurance can only be claimed if the insured's illness is in a critical phase (stage 4).

Buy with a Clear Purpose

Life insurance is different from other types of insurance. This product is specifically intended to help the insured's heirs if the insured leaves.

For this reason, life insurance is recommended for those of you who are married. Especially if you have children.

After knowing what went wrong in buying life insurance, set clear goals and buy according to those goals.

Thus the Mistakes of Buying Life Insurance that Many Do This is made to be useful.