Explained: what not to do when choosing a term insurance policy

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Term insurance is often called the purest form of life cover. For a relatively low premium, you get high coverage that ensures your family’s financial stability if something happens to you. But because policies run for decades, the details you choose at the time of purchase matter a lot. Many buyers rush into decisions, swayed by low premiums or quick sales pitches, and regret it later.

One of the most common mistakes is going for a lower sum assured just to keep premiums low. Experts suggest coverage should usually be 10–15 times your annual income, enough to cover loans, daily expenses, and future goals like children’s education. Skimping here means your family could still struggle financially even after an insurance payout.

Another error is picking a shorter term because it comes cheaper. The problem is that if your cover expires while you still have dependents or loans, you’ll need to buy a fresh policy at a much higher premium due to age. It’s smarter to align the term with retirement age so that your family is protected through your working years.

Some buyers withhold medical information, smoking habits, or pre-existing illnesses to get a lower premium. This can backfire badly. If the insurer finds discrepancies when a claim is filed, it could reject the payout. Being transparent upfront avoids heartbreak for your family later.

Critical illness, accidental death, or disability riders can add valuable protection to your term plan. Many people skip them, focusing only on the base cover. While not every rider is necessary, the right ones can provide crucial support in unexpected situations.

A plan bought years ago may not match today’s financial reality. Marriage, children, or new loans increase responsibilities. If you don’t revisit your cover, it may fall short when your family needs it most. Reviewing your policy every few years ensures it keeps pace with your life.

Ideally 10–15 times your annual income, adjusted for loans, expenses, and long-term goals.

Yes, many insurers allow “step-up” options or you can buy an additional plan. But it’s best to plan ahead and take adequate cover early.

Usually yes, especially for higher coverage. It ensures transparency and reduces the chances of claim rejection.