Insurance is one of the most misunderstood financial instruments. Everyone has their own opinion about it and often they have the wrong information. Read on to know common myths about the term insurance policy and the truth behind it.
Everyone has a different opinion about the term insurance policy. It is one of the simplest forms of insurance and yet the most misunderstood types of insurance. It is the purest form of life insurance that provides a death benefit to the nominee in case of demise of the policyholder. However, there are many misconceptions about it. Here are some of the most common term insurance myths and the reality behind them.
Myth 1
Single people don’t need insurance cover
Truth
A lot of people in India have a false notion that they need not buy an insurance cover until they get married or become a parent. Even if you are not married yet, you must invest in a term insurance plan for the debts you may have like a Car Loan, Personal Loan, Credit Card dues or Home Loan. You would surely want to keep your family safe from bearing the burden of your debts in case of your sudden demise. Also, if you are the sole breadwinner in the family, the term insurance will give your family a financial cushion against emergencies.
You can, however, put off buying a term plan if you don’t have any debts or dependants, and you have sufficient savings to take care of the expenses arising from any emergencies.
Myth 2
Term Insurance is expensive
Truth
Several people avoid buying insurance because they believe it is a costly investment. However, the truth is that the term insurance policy is one of the cheapest types of insurance cover. You can buy a term insurance policy for a premium as low as INR 500 per month. Several insurance companies offer term insurance at an affordable rate and provide coverage up to Rs 1 crore and more. Do your research well about the different policies in the market and choose the one that suits your budget.
Myth 3
You cannot buy term insurance after the age of 40
Truth
It is the general notion among Indians that people who are older than 40 years cannot buy a term insurance plan. The reality is, many insurance companies in India allow you to buy a policy until the age of 65. So, if you are planning to purchase term insurance after 40, you can still do it. But, you should buy coverage at a young age so that you can get the cover at a lower premium.
Myth 4
The group insurance provided by an employer is sufficient
Truth
The group insurance provides only basic benefits and often the coverage amount is inadequate to cover your family’s needs. Hence, you should not rely entirely on the group insurance to cover the risk. You must invest in a personal term insurance plan and get sufficient coverage to meet the needs of your family.
Myth 5
Buying a term life insurance policy online is risky
Truth
When you buy insurance online, you can compare the plans of different insurance companies simultaneously and make an informed choice. Also, by purchasing insurance online, there is no involvement of the agents or middle-men, and you can save a significant amount and reduce the overall insurance cost.
Now that you know the myths, shed the wrong notions you have about term life insurance and buy a cover to suit your needs.
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