Buying term insurance is one of the smartest financial decisions you can make, especially if you have people who depend on your income. It offers peace of mind, knowing that your family will be financially secure even if life takes an unexpected turn.
But here’s the thing, not all term plans are equal, and not all purchases are made wisely.
Whether you’re buying your first life insurance policy or revisiting your existing one, it’s important to avoid these common (and costly) mistakes.
1. Choosing the Cheapest Policy Without Understanding the Coverage
We all love a good deal, but when it comes to term insurance, cheapest doesn’t always mean best.
A low premium might mean:
- Shorter policy term
- Lower coverage than you need
- Fewer benefits or exclusions you’re not aware of
Instead, look for a plan that balances affordability with adequate protection. Use premium comparison tools, but don’t let cost be the only factor.
2. Underestimating the Coverage You Actually Need
A common mistake is picking a random figure, say ₹50 lakh, just because it sounds big. But will that be enough for your family?
Here’s what you should factor in:
- Daily living expenses (for at least 10–15 years)
- Outstanding loans (home, education, car)
- Future goals (children’s education, marriage)
- Medical costs and inflation
Most financial planners suggest a cover of 10–15 times your annual income.
Choosing the right sum assured means your family can continue to live with dignity, even in your absence.
3. Not Using a Term Insurance Calculator
Many buyers still don’t use a term insurance calculator, which can help you estimate:
- Ideal coverage
- Premium based on your age and health
- Suitable policy term
Skipping this step means you’re likely guessing, and that’s a risk you don’t want to take with your family’s future.
4. Hiding Health or Lifestyle Information
It might be tempting to skip that “smoking” checkbox or downplay a medical condition to lower your premium. But in insurance, honesty really is the best policy.
Why? Because during a claim, if the insurer finds that crucial details were withheld, your claim can be rejected, leaving your family stranded.
Always disclose:
- Pre-existing medical conditions
- Smoking, drinking, or other habits
- Overseas travel plans (especially if you live abroad)
It’s better to pay a slightly higher premium than risk a denied claim later.
5. Not Reading the Fine Print (Yes, We Know It’s Boring)
But it’s important.
Many people assume all term insurance policies are the same, but each has different:
- Inclusions and exclusions
- Rider terms
- Grace periods
- Claim procedures
For example, did you know some plans don’t cover death by suicide in the first year? Or that a critical illness rider may come with a survival period clause?
Spend a little extra time reading the policy brochure. It could save your family a lot of stress later.
6. Ignoring Riders That Could Add Real Value
Riders are optional benefits that enhance your base policy. Common ones include:
- Accidental death benefit
- Critical illness cover
- Waiver of premium on disability
Many people skip riders to save on premium, but these additions can make a huge difference in real-life situations.
For example, a critical illness rider pays out a lump sum on diagnosis of serious conditions like cancer or heart disease, giving you the financial freedom to focus on recovery.
7. Opting for a Short Policy Term
Choosing a shorter policy term, say 10 or 15 years, just to reduce premium may feel smart now. But what happens if you outlive the policy?
You’ll need to buy a new plan at an older age, when premiums are much higher and health issues may limit your eligibility.
A better approach? Choose a term that covers your entire earning period, usually till age 60 or 65.
8. Not Reviewing Your Policy After Major Life Changes
Your term plan shouldn’t be a “set it and forget it” decision.
If you:
- Get married
- Have children
- Buy a home
- Take a large loan
- Start supporting aging parents
…it’s time to review your coverage.
Some plans allow you to increase your sum assured during key milestones. If yours doesn’t, consider buying an additional policy or upgrading.
9. Naming the Wrong Nominee (Or Forgetting to Update)
Your nominee is the person who will receive the sum assured in case of your passing. A surprisingly common mistake? Naming a parent or sibling and then forgetting to update it after marriage or childbirth.
Make sure:
- Your nominee is someone who will manage the money responsibly
- You update the nominee if your family situation changes
This ensures the payout reaches the right hands, without legal complications.
10. Delaying the Purchase for “Later”
One of the biggest mistakes people make?
Waiting.
Many think they’ll buy term insurance “once they settle down” or “when income increases.”
But here’s the truth:
- The younger you are, the lower your premium
- Any health issue in the future can make you ineligible
- Tragedy doesn’t wait for you to be ready
Start small if you have to, but start now.
Final Thoughts
Term insurance is not about planning for death. It’s about protecting life, the life your loved ones deserve even when you’re not around.
Avoiding these mistakes means your policy does exactly what it’s supposed to, your family isn’t burdened during an already difficult time and you stay confident in your decision.
So do the research. Use the tools. Ask questions. Because when it comes to life insurance, the biggest mistake is not buying it at all.
