Life insurance has to be bought for the right reason, like to protect your dependents and not because you have some extra money and don’t know what to do with it. Never buy a life insurance policy for the following reasons because you might end up buying a wrong policy that might not suit your actual needs.
- Biased because of the agent: Do not buy a policy because the insurance agent is a friend or family member or because the agent was very helpful or because the agent said that a particular policy is great. Always make your own decisions without being biased in any way after analysing and doing some research about the policy.
- To save tax: Do not buy a life insurance policy as deadlines come closer to make some tax-saving investments. It might be that time of the year where you have to show some proof of investment to save your tax money and the only quick way is to buy a life insurance policy.
- As a guaranteed returns investment: Considering life insurance as a long term investment with guaranteed returns and buying a policy is not the right reason to buy it. There are much better and safe options that will give you even better guaranteed returns.
- For your retirement: Do not buy life insurance policy thinking it as a long term investment that will help to build your retirement corpus. In reality, the amount that you will get from such long term life insurance policies is much lower than the returns that you will get from PPF and Voluntary Provident Fund.
- No need of medical tests: Buying a life insurance policy that does not require any medical tests to be done, actually puts you at risk rather than the insurance company. A rigorous medical test procedure makes it the company’s responsibility to assess the buyer’s health condition. If in case the buyer happens to die of a health condition, the company cannot deny the claim saying that the buyer had hidden the facts. The absence of proper medical tests makes it the buyer’s responsibility to declare all his medical conditions, allowing the company to reject a claim if it feels the buyer lied about his health.