Your life insurance policy can be your lifeline if you avoid these mistakes… Moneycontrol News @moneycontrolcom 1/6 Having adequate life insurance cover in your portfolio is a must. Life insurance is bought for many reasons which may not only include protection purpose but also to meet various financial goals of your life like child marriage, wedding planning and so on. Therefore, it becomes necessary to understand the main motive behind every life insurance policy. Here are few mistakes one should avoid while buying a life insurance for themselves: 2/6 Not Knowing The Purpose | Many of us buy insurance only to save ignoring the fact that life insurance is mainly bought for protection purpose. Life insurance policy helps in securing your dependents and your future liabilities if something happens to you. Providing you tax benefit is not a primary objective of any insurance policy. It is an additional benefit which every individual enjoys once they buy a life cover to protect their family. 3/6 Not Calculating The Insurance Cover | Most of the time people get into the trap of buying life insurance policy which provides them highest sum assured without calculating whether they really need that much cover at that point in time or not. It is important to calculate your overall annual expenses. Therefore, you should take a cover accordingly, otherwise you may end up paying a heavy premium. 4/6 Not Knowing The Policy You Need | Do you need a ULIP plan? Or, do you need a term insurance to protect your long term liabilities? It becomes very important to know which policy you need so as to cover your financial liabilities well. ULIP is a combination of insurance and investment basically giving dual benefit of growth and protection. On the other hand, Endowment plans invest in low risk instruments and offer guaranteed maturity benefits but the returns offer by these plans are quite lower as compared to ULIPs. 5/6 Not Knowing The Premium Paying Term | For every insurance plan you have to pay a certain amount of premium. Every plan has different-different premium paying terms (PPT’s) as per the policy. Knowing the PPT will let you know the exact amount you are going to pay for that particular insurance cover. Also, you can calculate returns which you may get on your survival if it’s a non-term plan. 6/6 Not Knowing The Claim Settlement Ratio | One of the important factors to choose the insurer is knowing the company’s claim settlement ratio. You should know whether the company is reliable and settle one’s insurance claim on time or not? “Claim settlement ratio is the ratio of approved claims to the total number of claims filed. Therefore if you know the claim settlement ratio, you can make a better decision on selecting the insurer and the kind of life insurance policy,” Agarwal added.