Disadvantages of Life Insurance

The following are the main life insurance disadvantages:

 High premium for aged people: This is the major disadvantage of life

insurance policy. The higher the age the higher would the premium to be paid
in the life insurance. This is due to the simple fact that the risk increases with
the age so is the premium. So, it is advisable to take life insurance at a very
early age to prevent yourself from paying high premiums. There is a chance
where the insurance companies have rejected or denied providing policy to
old age people having ailments.
 Difficult to calculate the returns: The returns on the life insurance policies
are quite complicated and it is highly difficult to predict the returns. The
returns from life insurance are purely based on market conditions and
performance. So a particular figure is difficult to arrive at in the case of life
insurance unlike PPF and other fixed deposit schemes.
 Complex Policies: In India, many insurance companies offer different types
of life insurance plans. You can choose the best life insurance plan as per
your requirement. But it can also create confusion in the minds of the
customer because different insurance policies have different features. Some
policies are simple, and some are not so simple. It can be daunting to choose
the right life insurance policy.
 Insurance Companies May Not Pay the Benefits: The insurance
companies use various tricks to avoid paying the benefits even after the
maturity of the policy and also they have denied paying the sum assured or
the death benefit to the policyholder or the nominee. They would mention
many hidden charges or clauses to reduce the pay-out. So, it is important to
carefully understand the details of the policy and choose a company that has
a positive pay-out rate. Things to know about the merits and demerits of life
insurance and the importance of having life insurance it is advisable to talk to
our agents before entering a contract.
 Awareness of Exclusions, Hidden clauses: Any financial product available
in the market certainly has some exclusions and hidden clauses incorporated
into it. It is your responsibility to find out those clauses and choose the right
life insurance policy. For example, most of the policies don’t pay for suicide in
the first year and almost all the policies exclude loss of life due to drugs
overdose or involvement in criminal activities.