Do's and Don'ts While Buying a Term Insurance Policy

Do’s (Things You Must Do)

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1. Assess Your Coverage Needs Carefully

Calculate the Human Life Value (HLV) — your income, liabilities, family expenses, future goals (education, loans, etc.).

Ideally, the sum assured should be 10-15 times your annual income to ensure your dependents can maintain their lifestyle.

Use online HLV calculators or consult an advisor to get the right estimate.

Why: Underestimating coverage can leave your family financially vulnerable.

2. Disclose All Facts Honestly

Provide accurate details about your age, occupation, income, lifestyle, and medical history.

Declare smoking/drinking habits and any preexisting illnesses truthfully.

Why: Concealment of facts may lead to claim repudiation later, even after years of paying premiums. Term insurance relies on the principle of utmost good faith.

3. Compare Plans from Multiple Insurers

Evaluate different insurers on premium rates, claim settlement ratio, solvency ratio, and policy features.

Use IRDAI’s annual report or verified comparison portals to make an informed choice.

Why: Term insurance is a long-term commitment; selecting a stable and reputed insurer ensures peace of mind.

4. Understand the Policy Terms and Riders

Read the policy brochure and key benefit illustration before signing.

Riders such as Accidental Death Benefit, Critical Illness Cover, and Waiver of Premium can add value at nominal cost.

Avoid unnecessary riders that don't suit your life goals.

Why: Knowing inclusions, exclusions, and waiting periods helps avoid future disputes.

5. Choose the Right Policy Duration

Ideally, cover yourself till your planned retirement age or till your major financial liabilities (like loans) end.

Don’t take overly short terms just to save premiums.