Every competent financial plan will recommend the shortfall amount that is needed to secure your family based on your current lifestyle, high priority goals and existing liabilities. Here are the 5 most common mistakes you should definitely try to avoid while mulling over your need and extent of insurance coverage:

• Avoiding mortality and life insurance discussions:

Life insurance deals with mortality. You are talking about your death here. That is not very good to read, leave alone hear. So  most people don’t talk about it.Not talking about life insurance is the first mistake investors should avoid making. They step far away from the eventuality that one day they will die and that death could even happen sooner. The faster investors embrace this discussion, the better it will be for them and their loved ones.

• Buying life insurance once is enough :

Life insurance is not a one time activity. With increasing liabilities in your life, changing lifestyles, life milestones such as getting married, having a family, being a single parent etc, the insurance requirement would also keep increasing over a period of time. Many fail to prioritise goals such as protecting children’s education or buying a self occupied property. However, it is extremely common to make mistakes during this process. cognize the fact that the need for life insurance changes with time – they take life insurance once and forget  about revisiting it. Just like how a financial plan requires regular reviews, your insurance plan would also need to be reviewed on a periodical basis.

• Choosing the wrong policy: 

Using ULIPs or endowments to cover your life is easily the most common mistake made by investors. Though ULIPs have now undergone a lot of changes, insurance agents still try pushing them as the basic life insurance product for investors . With the tax season round the corner, investors need to be more careful – remember that the months of January, February and March are when you want to avoid products like endowment plans, moneyback plans, whole life plans and ULIPs . There are better tax saving products available .ULIPs and endowment policies are investment cum insurance products which have their own lock in periods and can not be easily liquidated before its lock-in period or maturity . Some products even have surrender charges if withdrawn within a specific period .  If you are stuck with a wrong insurance product which you cannot liquidate quickly, your entire financial planning could be jeopardized because of this. Hence purchasing pure risk cover in the form of term insurance is the most effective way to protect your family with low cost .

• Going with the lowest quote:

An extremely worrisome fact that many investors overlook in the purview of low prices is the reliability of their insurance provider. In this sense, it is good to avoid companies with a higher-than-average complaint ratio ,low customer ratings and having low claim settlement ratio . While it is good to compare insurance companies and choose the one with competitive prices, make sure the insurer you choose is financially sound and provides good client service.

• Depending on corporate covers : 

Many times, investors find excuses in not buying life insurance merely because they have life cover available from their employer.  In case , if you quit your job , this coverage would immediately cease and by then if you have any lifestyle illness, there may be a big rate up in premiums while purchasing a personal life cover or in worst cases , the policy may even get rejected . It is important to diversify risk and consider purchasing personal insurance. This would be helpful in ensuring risk protection is always available and is not dependent on any external factors.