Introduction
Buying life insurance is one of the most important financial decisions you’ll make — yet most people in India get it wrong. From buying the wrong type of policy to being underinsured, these mistakes can cost your family dearly.
In this post, let me break down the 9 most common mistakes Indians make while buying life insurance — and how you can avoid them to protect your loved ones the right way.
1. Choosing Insurance as an Investment
One of the biggest blunders is treating life insurance like an investment. Plans like ULIPs and Endowments promise returns, but give neither proper coverage nor good returns.
Smart Tip: Separate insurance from investment. Buy a pure term plan for protection, and invest in mutual funds or PPF for returns.
2. Not Buying Enough Coverage
Many people settle for ₹10-20 lakh coverage. That’s rarely enough in today’s world with rising costs, education expenses, and EMIs.
Smart Tip: Use this thumb rule — your life cover should be at least 15–20 times your annual income.
3. Buying Without Understanding the Policy
Agents push policies using technical jargon, emotional pitch, or promised returns. Most people don’t read what’s actually covered and excluded.
Smart Tip: Always read the policy brochure. Ask questions like: What happens if I miss a premium? Is critical illness covered?
4. Delaying Life Insurance Till Later
Younger individuals often skip buying life insurance thinking it’s for older people. But life is unpredictable and premiums rise with age.
Smart Tip: Buy term insurance as early as possible — it’s cheaper and provides peace of mind from day one.
5. Relying Only on Employer-Provided Insurance
Most corporate policies offer coverage of ₹5–10 lakh — which may vanish the day you switch jobs or retire.
Smart Tip: Use your employer’s insurance as an extra layer — not your main safety net. Always have your own personal policy.
6. Not Disclosing Health Conditions
To save on premiums, some people hide medical conditions like diabetes or smoking. This can lead to claim rejection later.
Smart Tip: Always disclose everything truthfully in the proposal form. It protects your family when it matters most.
7. Choosing a Short Policy Term
Some people opt for 10–15 year coverage thinking it’s enough. But what if you live longer and your policy expires when you need it most?
Smart Tip: Choose a term plan that covers you till age 60–65 or till your major financial responsibilities end.
8. Not Reviewing Insurance Over Time
Your needs change — marriage, children, home loan, new job. Yet most people never upgrade their policy.
Smart Tip: Review your life insurance every 3–5 years. Add riders or buy additional cover if your responsibilities grow.
9. Falling for Fancy Riders You Don’t Need
Critical illness, accidental death, waiver of premium — riders can be useful. But agents often push them to increase premiums.
Smart Tip: Add riders only if you genuinely need them. Otherwise, keep your policy simple and affordable.
Conclusion: Buy Smart, Not Emotionally
Life insurance is meant to replace your income if you’re not around. It’s not a lottery or investment — it’s a responsibility. Make sure your purchase is backed by logic, not emotion.
Choose a term insurance policy from a reputed insurer, with the right cover and term, and your family will always be financially safe — no matter what happens.