When Should You Not Buy Term Insurance?
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The concept of life insurance can be explained as a system of small amounts of payment to the insurance provider at monthly intervals. So that when you are not around, your loved ones get a sum of money approximating the amount you would have earned if you would have stayed alive. Unfortunately, few individuals often purchase life insurance for the wrong reasons, like saving taxes and end up with an unsuitable plan or paying a higher premium.
Hence, it is advisable not to buy an insurance policy just to save taxes or a plan just on mere recommendation of a friend. Instead, you should consult a professional or do a thorough research yourself to avoid making the mistake of picking an insurance plan for the reason mentioned in the article below.
Times When You Should Not Buy Term Insurance
Here are the most common and wrong reasons for purchasing an insurance policy.
1. To Save Your Taxes
It would be best not to treat a life insurance policy as a yearly tax-saving investment at the end of a financial year. People often end up with a convenient but not the best policy plan due to the hurry in decision making. As a result, they become liable to losing money in the guise of tax saving.
2. To Make Investments
It is advisable never to mix your insurance and investment needs. A term plan is a pure insurance product which helps you keep your family and loved ones financially secure when you are not physically around them to take care of their needs. Whereas, the purpose of an investment plan is wealth creation. Thus, you should not confuse investment with insurance and make a wise decision.
3. To Help Your Agent Friend
The feeling of moral obligation to help your insurance agent friend, relative, or acquaintance can drag you towards a wrong financial decision. It is advisable not to purchase life insurance under any compulsion or force and make an informed and well-thought choice after learning about all the aspects of a specific insurance policy.
4. Recommended By Your Friend
It is advisable not to solely purchase a policy plan based on a friend's or a relative's recommendation. You should consult a professional financial advisor or a trusted insurance agent to advise on an appropriate plan which meets your needs.
Endnote
Purchasing a life insurance policy is a significant financial decision that should be made after thorough research and detailed comparisons of different policies available in the market. Hence, it would be best if you bought a policy for the right reasons, i.e., your family's financial security after you.
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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
