Today, people feel uncomfortable talking about death and the consequences of one’s death leave alone the financial aspect and the void that a person’s absence will create. Financial planning is very necessary for the family that have been left behind. Life insurance happens to be the most important aspect of financial planning and the most crucial one because it looks after the family’s financial needs after the death of the bread winnerwinners. Life insurance often does not get enough attention that is required and thus it falls prey to many misconceptions and some common life insurance myths.
Common Myths of Life Insurance in India
These some Common Life Insurance Myths are often irrelevant and senseless and far from the truth. Let us have a look at it.
Life Insurance is not Affordable
Term plans provide very cheap premium plans and happens to be the simplest form of protection plan. You need to pay small amounts as premium to get a big amount of life cover which is paid if the policy holder dies within the time specified. This plan provides financial security for your family in your absence. The cover provided is at least 10 times as that of the premium paid towards the policy.
Life insurance is for Older People
This myth is baseless as it just says that young people are somehow prone to death. Youngsters often believe that the life insurance is for older people or people in their late 30s. It is advisable that one should get a life insurance as soon as one starts earning to secure the financial future of oneself and the loved ones. Buying an insurance policy when you are younger makes sense as younger people are considered a lower risk for investment, which will lead to lower premiums. this, you are more likely to get an affordable policy with lower premiums when you are younger.
Group Insurance Plans are Enough
Most companies cover their employees under the group insurance plans. What people often forget is that this policy is effective only until the person is working with a particular employer who provided him with the insurance. In the event of a change in job or termination, this insurance automatically will cease to exist leaving you without any insurance. To avoid such scenarios, it is recommended to purchase individual life insurance policy. Group insurance plans are not enough to cover your present and future liabilities. Also, these plans do not allow to ass riders or other benefits.
Sum Covering the Existing Income is Enough
With the growth in income, you and your family are being accustomed to a certain lifestyle, which will not be present in your unfortunate absence. There will be need for extra money to cover the income of the person who is absent. Other than this, liabilities, loans, EMI and the child’s education are some very expensive business, which will be extremely difficult to handle with the financial help of the outsider. Inflation and other expenses are bound to occur which will make the sum assured insignificant. Thus, looking for a higher amount is advisable rather than sticking to the existing income.
Single People do not Require Life Insurance
Life insurances can provide you with benefits on investment if invested properly. Retirement plans and wealth creation plans are a good option to consider here.
Insurance is only for the Breadwinners
The future of your children, the retirement years of your spouse need protection as well. Child plans which provide regular payouts provide a secure financial future for your child whether you are around or not. Similarly, retirement plans help as well.
Insurance are Useless as they Provide us with no Return
You pay premiums during the active years of the policy otherwise known as the term. Life insurance does provide you with returns, first one being “peace of mind” when you now know that the policy will take care of the financial situation in your absence. In addition, there are certain plans that provide returns on surviving. In addition, some life insurance plans provide you with a certain cash value that can be withdrawn as and when you need it.