Insurance Mistakes That Can Cost You Thousands (And How to Avoid Them)

Health insurance pitfalls

Buying too little coverage: A low sum insured means higher out‑of‑pocket expenses during hospitalization; prioritize adequate sum insured over the lowest premium.
Ignoring waiting periods: Pre‑existing diseases, maternity, and specific procedures often carry 2–4 year waits; claims in this window can be denied outright.
Non‑disclosure of medical history: Hiding conditions/medication invites claim rejection and even policy cancellation for misrepresentation.
Room‑rent sub‑limits: Choosing a room above the cap can trigger proportionate deductions on the entire bill, not just the room tariff.
Skipping network checks: Out‑of‑network hospitalization can forfeit cashless benefits and slow reimbursement, increasing immediate cash needs.
Delaying purchase and renewals: Waiting raises premiums and exclusions; missing renewal can reset waiting periods and erode no‑claim bonuses.
Not porting when needed: If service is poor or benefits lag, porting can preserve NCB and waiting‑period credits; time porting well and expect underwriting by the new insurer.

Inadequate sum assured: Target roughly 10–20× annual income plus liabilities; underinsuring leaves dependents exposed despite paying premiums for years.
Too short a policy term: Coverage should extend through retirement or until major liabilities and dependents’ needs end; a short term forces expensive re‑buy later.
Delaying purchase: Premiums rise steeply with age/medical issues; buying earlier locks rates and coverage while healthy.
Incomplete disclosures: Omitting health, lifestyle, or occupation risks can void claims; full and accurate proposal forms are essential.
Misusing tax features: Be mindful of premium‑to‑sum‑assured ratios for tax benefits; exceeding limits can reduce deductions or tax maturity benefits under certain variants.

Read policy wordings: Confirm exclusions, waiting periods, co‑pays, disease‑wise sub‑limits, and room‑rent caps before purchase or renewal.
Right‑size coverage: For families in metros, consider higher sums insured or super top‑ups to handle large medical bills; review annually with inflation.
Disclose everything: Medical history, tests, ongoing meds—transparency reduces claim friction and protects against repudiation.
Optimize networks and riders: Choose plans with strong hospital networks; add riders like critical illness or restore benefits where value is clear.
Maintain continuity: Set auto‑renewals and reminders; avoid lapses to preserve NCB and waiting credits.
Consider portability: If dissatisfied, port during renewal to keep accrued benefits while upgrading terms; start the process 45–60 days before expiry.

What is the most expensive hidden clause? Room‑rent caps leading to proportionate deductions across the bill; opt for plans without such caps if budget allows.
How long are PED waiting periods? Commonly 2–4 years, though some plans offer shorter waits via add‑ons; always verify disease‑specific sub‑limits too.
How much term life is enough? Typically 10–20× annual income plus outstanding loans; adjust for dependents and future goals.
Can benefits be kept when switching insurers? Yes—porting retains no‑claim bonus and waiting‑period credits, subject to new underwriting.