People usually take decision of buying or not buying life insurance being influenced by opinions shared by relatives or family members. But before believing, you must be sure that what you heard is true. In this blog, we will focus on some commonly believed facts & myths about term insurance.
5 Popular Myths about Term Insurance
Myth 1- I am covered in group life insurance. I don’t need another term cover
The truth is that you will be covered under a group life insurance until you are employed with a particular firm. Once you left the company, your life cover ceases and in this scenario, you need to buy a separate term plan to get yourself covered against the uncertainties of life.
Moreover, a group insurance plan may be able to fit your life cover needs, as you may get only the basic cover. Thus, it’s wise to buy a separate term life cover, in addition to group insurance scheme. You need to take a right life cover to provide financial cover for your family & loved ones.
Myth 2- Stay-at-home does not require life insurance
In reality, term insurance is equally important for stay at home spouse. Usually, the life insurance policies are bought by the employed people. A stay-at-home individual may not be generating income, however you must assess expenses that the family would have to bear in the event of his/ her demise.
In case of untimely death of a stay-at-home partner, the working partner has to give more time and efforts at home which would resulting to take some time off from work. You need to hire a domestic worker to take care of household tasks. So, there are emotional and financial implications that you and your family have to be borne, in case of death of stay at home spouse. To cover the family against financial squeeze, it’s advisable to get the life cover for all family members.
Myth 3- A term coverage of 2 times of salary will be enough
Under term insurance, you need to choose a sum assured to cater future financial needs of the dependents taking into account its cost of living. To cut off in premiums, people usually choose a less coverage result into a life cover that would not suffice to meet all financial requirements of family members and dependents.
The amount of term insurance cover however depends on your specific situation, a coverage of twice the salary would not be sufficient. It is advised to opt a coverage amount which is 15-20 times of the annual income.
Myth 4- I am investing in other schemes, instead of buying life insurance
Although various investment avenues offer returns on investments, but it doesn’t provide cover against the life risks. Having a life insurance coverage holds specific importance. It ensures financial protection for the family, in the event of your demise.
In case you want to build wealth along with the assurance of financial protection, you can simply choose to invest in ULIP. A ULIP comes with insurance plus investment element that invests a portion of your invested money in stock market and a small portion of your investment goes to offer life cover.
Myth 5- With Medical Condition, I will get a Life Cover
If suffering from any medical ailments, an insurance company will only increase the premium amount considering the high life risk involved.
Moreover, you are advised to fully disclose all your medical history when apply for a term life cover. The insurance company wants to check how much risk they are involved into by offering you the life cover. While sending application for term insurance cover, you need to make sure not to suppress material facts like medical history. If the company found out anything that you kept it hidden from them, it can deny for settling the claims for not disclosing the facts.
You never want to put the financial security of your family at risk, so buy a term life insurance cover. Also, consider the above listed points prior buying a term plan.