Term Life Insurance is a common financial term that ensures financial security for the insured’s family. The insurance company pays your family an amount equal to the sum assured, in case of your unfortunate demise. Financial experts also make a stress on the importance of having a life insurance. Most of the buyers have various misconceptions towards buying a policy.
Let’s understand the common myths & facts related to term life insurance.
Myth 1:- I am still young and don’t need life insurance: People have a belief that they are too young and it’s not the right time to buy a life insurance. People who started earning and are single have a thinking that they don’t have anyone financially dependent on them, so they don’t need to buy insurance.
Fact: Even when you are single, you might have a younger sister/brother or parents dependent on you. It’s thus a wise move to buy a term plan that can ensure financial security for your dependents and they don’t have any financial adversity, in the vent of your death. Buying a term plan early in your life also proves helpful, as you can obtain a life cover at a lesser premium.
Myth 2:- Life insurance is only a waste of money: A term insurance policy provides a pure life cover and thus, it does not provide any benefit if you are alive till the end of the policy term. People have a thinking that, as a term plan does not provide any maturity benefit, so it’s a waste of money that you pay as premium. But, it’s not a right perspective.
Fact: Everyone is looking to achieve financial security for the family and this objective can be achieved by buying a term plan. It provides a sum assured amount as a lump sum to your family or nominee that helps them attain financial independence, even when you are not around. Buying a life insurance plan is not a waste of money, however it’s a vital decision to invest your money towards achieving financial security for your loved ones.
Myth 3:- Insurance needs are same for all: People usually buy a life insurance just to enjoy tax benefits and they take a hurried decision in buying the policy. They think that insurance needs don’t vary and they buy the policy without assessing the needs of the family.
Fact: Insurance needs actually differ from one person to another and it widely depends on age of insured, number of dependents, and lifestyle expenses of dependents. A married people with a family obviously has more financial obligations than an unmarried youngster and thus, he needs a higher cover that can meet various financial obligations such as child’s education and/or marriage, repayment of loan, regular household expenses, even in your absence. It’s thus recommended to choose a term plan that caters your family’s financial needs.
Myth 4:- I can’t afford premiums for life insurance: Many people think that they can’t afford the premiums for a life insurance policy. It’s a misconception.
Fact: A term life insurance is a pure life cover in nature and it is available in lesser premiums that any other insurance policies such as endowment, money back or ULIP plans. It ensures financial protection for your family at a cost-effective price, so it’s a fair deal. Moreover, you have the flexibility to pay the premium in monthly, quarterly, semi-annually or annually mode. Now, the insurance companies have come up with online term insurance plans that are much cheaper and also available with hassle-free procedure for buying the policy.
Myth 5:- Claims are always delayed: Insurance buyers are always of a thinking that claims are intentionally delayed by insurance companies. However, it’s not a truth.
Fact: When it comes to paying the claim amount, the insurance company makes the adequate checks and also ensure that documents submitted for the claim are genuine. IRDAI, the insurance regulator in India have instructed insurance companies to settle claims within 30 days from the date of receipt of the required documents. If the company seeks further verification, it needs to get completed within six months from the date of receiving the written application for settlement of claim.
Read our article “Myths of Online Insurance Policy” for understanding more about Insurance Policy.
A term insurance policy ensures a financial protection for your family and thus, it’s a crucial financial decision. This article helps you understand term insurance myths & facts related to it. Before buying a term policy, you are recommended to buy a suitable policy after doing a thorough research, so it pays your family an adequate amount that helps you meet all financial obligations, even in your absence.