3. Buying too big a cover for too long a term

Principal Consultant, Gopal Kumar of Allons Insurance Research, says, “Do not buy a big cover just because the premium is low. Do so only if you need it.” This low premium policy may tempt you but this may become a major drawback for you. So you should select your insurance according to your affordability and suitable premiums. “Assess your need and asset-liability situation while buying insurance,” says Kumar.

4. Opting for too short a tenure or low insurance cover

To put into action the above precaution, you might make another big mistake by buying an insurance which provides a small cover of a short term. You should buy a cover which is big enough to take price-rises into account. But buying it at the age of 40 would be a waste of money too. Hence you should opt for a cover which continues till the time you get 60-65 years. Make sure that before deciding on the insurance amount, you evaluate your insurance needs carefully. It is highly recommended by financial experts that you should use insurance calculators for this.

5. Not setting up reminders for premiums

In case you miss out you premium date and the grace period too, your policy may get lapse. This 15-20 days grace period is provided to renew the policy not for continuing the cover. You can avoid such situation of missing your premiums. You can provide and ECS option to you bank to pay premiums at desired intervals. By this way you can ensure that you insurance cover doesn’t gets lapsed just because you missed out the dates.