Choosing the right insurance is not only essential for safeguarding financial stability but staying aligned with your financial goals. There are a myriad of insurance types based on needs; however, selecting the right one that ticks the checklist is a daunting task.
In this blog, we will highlight the most common mistakes that people make while buying insurance policies. Additionally, we will lay down potential remedies for avoiding those mistakes so that you can have a better experience.
Blunders to Avoid While Buying An Insurance Policy
Let’s delve into the common mistakes one by one and understand how to avoid them for a secure future:
- Focusing Only on Premium Amount
Insurance with the lowest premium amount often attracts more buyers. However, in most cases, insurance with lower premiums involves inadequate coverage which means they will be high in out-of-pocket expenses. Thus, buying insurance with only a low premium amount will make you pay more in the long run.
How to Avoid this?
The best way to mitigate this mistake is to consider the overall advantage of a policy like deductibles, coverage limits, exclusions, add-ons, etc. It is undeniable that a moderately higher premium policy will offer better financial stability and save you from making a big dent in your pocket. - Fail to Determine Actual Needs
Most people fail to understand their actual needs and preferences while buying an insurance policy. Whether you are buying health insurance or car insurance, selecting an insurance policy based on word-of-mouth or recommendations will not be a wise decision to make.
How to Avoid this?
The smart way to avoid this will be to assess your needs strategically before investing in a policy. You must consider factors like financial responsibility, health condition, number of dependents, age, and future financial goals to make an informed decision. - Ignoring Essential Policy Terms & Conditions
In most cases, insurance buyers skip through the important information like waiting periods, exclusions, and other clauses. Along with this, failure to completely understand the inclusions and exclusions in the coverage also leads to confusion. As a consequence, they are hit with a bitter realization that they are not protected against certain risks during claims.
How to Avoid this?
As a trusted and IRDAI-certified insurance broker, we always educate our clients to take the time to read the policy clauses before finalizing. We emphasize reading the exclusions, waiting period, and the clauses under which the claims can be denied. - Considering Riders Non-Essentials
Many individuals underestimate the power of riders or add-ons while add-ons are non-negotiables. These additional coverages enhance a basic plan and protect you from critical situations that the main plan may not fully cover.
How to Avoid this?
We recommend that individuals consider add-ons to make your policy a complete shield that protects you from any unforeseen events. Conduct a thorough assessment to check whether the add-on offers added protection for your unique need. The minimal additional cost for peace of mind is worth investing in. - Delay in Decision Making
Thinking that you don’t need insurance because of your young age, is the most common mistake to make that may lead to greater loss. However, the reality is that the more healthy and younger you are, the less premium you pay. With the uncertainty in the future, avoiding buying insurance may burn your savings and cause a lot of distress in the long run.
How to Avoid this?
The wise advice will be to start early as it will not only be cost-effective but also safeguard you during times of need. - Lack of Comparison Opportunities
Depending completely on the local insurance agent who would only want to push plans that make them most commissions, will make you regret your decision. Most often, you will find yourself trapped paying a high premium amount for a plan that offers limited or basic coverage.
How to Avoid this?
At Arrowhead, the primary benefit is the opportunity to compare different policies to check coverage limits, benefits, and exclusions. By being transparent with this valuable information, it becomes easier to choose a policy that meets needs and fits the budget. - Ignoring the Claim Process
Not taking enough time to understand how the claim process works is another severe mistake that may cost you more in the future. Policies that offer great coverage, however, take forever to make claim settlement will be of no use.
How to Avoid this?
The expert consultants at Arrowhead recommend clients check for a high claim settlement ratio and easy settlement process. We engage our clients to help them understand the claims settlement process so that they can benefit during critical moments. - Final Takeaways
Though there are a plethora of insurance policies in the market, choosing the most suitable is an overwhelming process. To make this entire process seamless, Arrowhead guides you by understanding your needs, requirements, and budgets and suggests the best suite of policies to choose from. Thus, with experts having your back, you know that you are well-protected from any unavoidable incidents.
