5 Life Insurance Policy Mistakes – How to buy Best Term Insurance in 2020? - YouTube

Namaskar, my name is Mukul and you are most welcome in Asset Yogi.

Friends when we start with our career, whether we start it from a job or a small business.

So as soon as we have started saving some money, we think to invest it so that it will grow.

In such a situation, most people often have an option like life insurance.

Because if you go to your bank then there also they will be selling life insurance to you.

Someone or the other agent must be selling you life insurance.

By saying that in this your insurance will also be done and along with this

your money will be doubled in this time.

But according to me if you buy life insurance just like an investment then it is a big mistake.

And these types of 4 more mistakes we will see in the video,

which is made when you are buying life insurance.

In today's world, insurance has become cheap.

If you want insurance cover of let's say 1 crore, then its premium gets started with just Rs 600-700 p.m.

And maybe when you have bought insurance at more price than this.

And why were those insurance were so much costlier? We will be knowing that in this video too.

And with that, we will see if we want to buy the best insurance; then how to buy it?

What are the factors that we have to see in it?

And with that, we will also see a live demo, that how can we buy it?

So you must stay tuned to this video.

While subscribing, also press the bell icon so that you can get notifications of the latest finance video.

So here the first big mistake that people do is.

Many people say that they don't need insurance.

Somewhere maybe their logic can be correct but it depends on how your condition is.

And many times, people don't understand the whole logic.

For example,

if anyone is a single earning member then he can say,

that since he has no dependents so he doesn't need insurance.

So if he wants to stay single whole life then his logic is correct.

And on the other side if there is a husband and wife and both are earning then they also can say that

because we are financially independent so we also don't need insurance.

But we have to understand that in case of single also;

if he marries in future then he will have dependents,

the wife can be also dependent and in future your children too.

Husband wife too, which are earning in today's date will have dependents in future

and liabilities will also be made.

As a lot of people buy a home on loan, it becomes a huge liability.

Similarly, you also buy a car on loan.

Then, if there are children in future, there are their wedding expenses,

education expenses and their regular expenses.

Now, maybe both the husband and wife are earning.

But in such case also, if your one earning is ended, any unfortunate incident takes place,

your spouse doesn't keep earning.

So the other husband or wife, there could be a lot of financial stress on them.

Maybe they can't pay the EMI of home loan in a single salary

because they also have to fulfil a lot of liabilities.

And with that, they have to fulfil their regular expenses as well.

So for that reason, we have to take insurance.

So that we can meet our liabilities and expenses in future.

So let's talk about the second mistake, which is also a huge mistake.

Many people say that insurance is a good investment.

Because you are getting insurance and your money will get doubled in so and so time.

In fact, you pay attention, agents will never tell you the annual returns in the insurance.

You have to calculate it on your own.

They will tell you that see your money will be doubled in 12 years, 13 years, 14 years.

But if money is doubling in 12-14 years, you will back calculate it to see,

how many actual returns are you getting?

If you here do calculations then you will find that you are getting returns of 5-6%.

This much is our inflation also gets increased.

So how much are our actual returns?

Zero, so what is its better way?

The better way is that you separate the insurance and investment.

What is the meaning of insurance?

That if any mishappening takes place so in that case your family gets supported.

So you should buy insurance separately.

And we call term insurance when you buy insurance separately, which is also called vanilla insurance.

Plane insurance.

You will only get death benefit from it, you will not get any maturity benefit from it.

Whatever premium you paid, let's say you paid a premium of Rs 1000, Rs 2000 per month.

That's your premium is only your death benefit, you will not get that money back.

So here people get a little bit of shock, that they pay the money and they will also not get that back.

Of course, because you are buying a thing, you are buying security for your family.

Remaining money that you are saving, see if you buy the complete endowment plan,

so you pay some money over there.

The money you are saving, you can invest in some other investment, or in the investment you likes.

Put in real estate, out in gold, put in mutual funds, put in stocks.

I am sure you will get better returns than 5-6%.

In fact, I can give you a tip here.

What do a lot of people do? They would have been running insurance as well as paying the insurance.

It is better that you buy term insurance than it and if your loan is going on then you should pay for that.

It may be possible that you are paying the interest of 8%,9%,10% in the loan.

So if you pay the interest of 8%,9%,10%, then it is also your return that you are getting.

So mistake number 3 is Under-coverage and Over-coverage.

Many times we take a little less insurance and many times we take a little more insurance.

So what's the optimum we should take?

See what is the meaning of under-coverage?

Maybe the liabilities you calculated in today's date,

you have calculated it according to your 1or 2 loans that are running.

And you have calculated the future expenses according to it.

On today's date maybe your dependents are only your wife and 1 child.

But in future maybe you take another home loan.

You may have another child in future.

So you take insurance according to your liabilities and expenses in today's date.

If in future, let's say your liabilities increase then you can increase your insurance cover.

The second point that comes is over-coverage.

So we don't have to take term insurance for all the members we have.

We have to take term insurance only for earning members.

It's a simple thing, if the earnings go in any form, then it is replaced by insurance.

And what's the optimum insurance we have to take?

See there is a rough thumb rule, you have to take insurance of 15 to 20 times your annual salary.

But it actually depends on how much are your liabilities.

How is your lifestyle? What are your monthly expenses?

So for that, I have done a detailed video, where we have seen 2-3 methods,

that how much we should take our life cover; could calculate it.

The fourth big mistake that we make is, we believe that the cheapest insurance is the best.

See somewhere logic is correct, that we get the max. sum assured in the least premium.

So it's understandable.

But let's understand with an example.

Let's say today you bought the cheapest insurance in which you get a good cover.

And after 10 years or 15 years,

Let's say any mishappening takes place; when your family actually needs the support.

And for some reason that company rejects your claim, rejects your family's claim.

The premium you paid for so many years, gets completely wasted.

When your family actually needed that money, they didn't get it.

And secondly, maybe it happens that the company doesn't exist after 10-15 years.

When we are buying insurance, then we are buying a promise, a guarantee.

that in the coming 20-25-30 years whatever the company is promising to us, they will fulfil it.

So that's why it is important you should go with a good brand name, whom you believe.

And it will exist in the coming 20-25-30 years, so see its past records.

And here you see its claim settlement ratio.

Claim settlement ratio means that

whatever claims the company got, how much do they pass from that.

The claim settlement ratio should be greater than 95% for any good insurance policy.

Secondly, you must see its claim rejection ratio.

Many companies reject a lot of claims, reject them upfront.

The claim rejection ratio should be less than 1, for a good policy.

And once you have selected the good brand names, let's say you selected the 5 good brand names.

After that, you have seen their claim settlement ratio and claim rejection ratio.

After that, let's say you have shortlisted the 3, which you believe are comfortable,

you find all their parameter correct.

From them definitely, whoever is giving you better premium,

that is maximum cover in the least premium, You can go with that policy.

The fifth huge mistake that we make is that we don't compare insurance plans.

See when we will compare insurance plans then only we will get to know which one is cheaper,

or which has what benefits?

But when you go to your bank where they are selling only 1 plan and only its benefits are told.

Because there the more benefit will be of that bank employee, he will get good commission.

We need to understand that.

And there you notice, a term plan is not being sold to you, their endowment plan is being sold to you.

So we need to be a little bit careful here.

What we need to do is to compare the insurance plans and

also the term insurance plan we have to buy.

What is its best way? That we buy insurance online.

And for example, we will see a demo online.

You can go to the Policy bazaar 's website, policy bazaar is a platform

where you will get a lot of insurance plans.

Term insurance plans are more than 30 and you will get plans of 15 companies.

So see here, if we go to the life insurance and if click on the term insurance.

Here we need to fill in our details, you enter your name, date of birth and enter your mobile number,

and you can see your codes.

So here you need to select whether you smoke or not, so here I click on no for now.

So smokers have a little bit more premium and non-smokers have less premium.

Here you need to fill in your annual income.

So let's say as an example I am putting my annual income

And here we are calculating 25 years.

That if on average someone has an age 25 years; so how much will be its premium?

So here let's say we select salaried.

And we select College graduate and above as a qualification.

So see here all the premiums are coming, we can see how much premium are we getting.

Let's say I sort according to prices, we sort it low to high.

So as we talked, here it is starting from Rs 700.

The premium is starting from Rs 680.

You are getting term insurance for very cheap.

In fact, you can compare all the term plans according to your situation.

You will get the link to the Policy bazaar in the description below.

By using an online platform like Policy bazaar, we get one more benefit is that when we compare our policy online,

So sometimes we get confused.

To choose the right policy, their executives can help us.

With that, if it comes to claim settlement, let's say any mishappening takes place.

So because there is a team i.e. claim settlement team of this big platform, you can also get help there.

But through offline agents, you may face problems with the claim settlement.

So we have compared that how can we get the best plan?

Now we will talk about some critical riders too.

When you are buying term insurance, you will see 3 riders in it many times.

The first one is critical illness rider.

That is if any type of critical disease happens, illness happens like cancer.

So in that case also you will get one-time payment,

it is also a good rider and you have to add it with the term insurance.

don't add it with the health insurance, because your term insurance premium is fixed.

But the premium of health insurance increases every year.

The second critical rider is the Accidental rider, so in the case of an accident rider

if you lose your total income then in that case also you will be paid a lump sum payment.

You should also add this rider to your term insurance.

The third is Premium Waiver.

For some reason, if you are unable to pay a premium.

If any mishappening takes place in that case also your premium will be paid automatically.

If you want then you can add these riders to your term insurance.

All in all, I hope after watching this video you have got the ideas

that what are mistakes we have to avoid while buying the insurance.

And on what things we have to pay little more attention.

If you liked this video please like and share it with your friends and family members.

Maybe they also have confusion; that how we buy the insurance?

And they also take good plan for them.

If you have any suggestions related to the video or to the channel, then you can comment down.

If you haven't subscribed to the channel then subscribe to it from the below

and press the bell icon on your phone, so that you get the notifications of the latest video.

So we will meet in the next informative video.

Till then keep learning, keep earning and stay happy as always.