Rushed insurance on March 31? How it can push you into poor coverage and costly plans

As an investor, should I avoid buying insurance products purely for last-minute tax saving, especially around March-end? How do rushed decisions impact long-term financial planning in terms of lock-in periods, premium commitments, and adequacy of coverage? What are the risks of ending up with unsuitable or high-cost traditional plans that don’t match actual protection needs? From a portfolio perspective, how should I evaluate insurance, term or health, based on life stage, dependants, and existing coverage? Should tax benefits be treated as a secondary outcome rather than the primary objective when selecting insurance products?

Advice by Arun Ramamurthy, Co-Founder, Staywell.Health

Individuals who purchase insurance just for tax-saving purposes, at the last minute, usually end up making poor financial decisions as a result of their lack of understanding of how the product works and the terms of the product, such as lock-in periods and long-term commitments. By nature, insurance is a tool that helps people manage their own risk; it is not just a tax-saving tool, and when it is purchased in haste it can result in under-insurance, incorrect premium payments, as well as unsuitable products.

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For example, most individuals purchase traditional, high-cost insurance plans, which do not cover their actual needs. Furthermore, from the overall industry perspective, there continues to be evidence that this is indicative of a need for greater overall financial literacy. Ideally, tax savings should be a byproduct of having a good financial plan instead of being the primary motivator for purchasing an insurance product.

For example, evaluating life stages, dependants and existing coverage need to be conducting prior to purchasing an insurance policy. If these steps are not done, the insured could find themselves facing either under-insurance or duplicate coverage as a result. Consumers need to have an evaluation of how well their insurance policy meets their long-term financial goals. This can be accomplished by purchasing a term and or health insurance policy that meets both the consumer's protection requirements and tax savings. The most important aspect of this is to consider protection first and then tax efficiency as the last option, not the other way around.

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March 31 is a crucial deadline and many investors rush to buy insurance purely for tax-saving, often leading to flawed financial decisions. Experts caution that such last-minute purchases ignore critical aspects like lock-in periods, long-term premium commitments, and actual coverage needs. Insurance is fundamentally a risk management tool—not just a tax-saving instrument—and hurried decisions can result in underinsurance, overpayment, or unsuitable products.

A common mistake is opting for high-cost traditional plans that fail to provide adequate protection. This misalignment can weaken overall portfolio efficiency and leave dependents financially exposed. From an investment perspective, insurance should be evaluated based on life stage, dependents, and existing coverage, with term and health plans forming the core.