What are the term insurance myths that you should know about?
The Covid-19 pandemic has affected the majority of the Indian population. However, on the other side, it has reminded all of us of one thing that is to be prepared to face the worst. Every individual should have a backup plan to achieve their goals in life. With this deadly virus spreading like a fire in the forest and the increased risk of getting infected, a term life insurance policy has become crucial to secure the financial needs of one’s family in case of an unprecedented situation.
But the fact is people are still unaware of term life insurance policy, despite the widespread availability of information about it. According to data from IRDAI in March 2020, the life insurance penetration in India as a ratio of premium to GDP was 2.74 as compared to a world average of 3.31 percent. The data clearly shows that many people in India still do not consider term life insurance policy necessary for themselves. And among all types of life insurance products, term life insurance policies are the most undervalued and misinterpreted one in the market. So, let’s discuss the common term insurance myths due to which people often ignore buying a term plan online.
- Term insurance only offers death benefit –
People have this misconception about the term insurance policy that it does not offers any maturity benefit after the policy term gets over. And this makes them hesitant towards buying a term plan online. Although term life insurance policy indeed provides a death benefit only, but with the change in customer’s preferences and lifestyle needs, term insurance is not limited in offering death benefit only. Insurers are now offering various customisable term plans catering to changing needs of the customers. Such as the return of premium term insurance policy wherein the policyholder gets back all the policy premiums paid in case of the insured person survives the policy term. This type of term insurance helps in savings for post-retirement period along with taking care of other liabilities.
Further, this policy can be customised to the extent that it will provide lifelong coverage, but the premiums need to be paid for a limited period. Policy applicants can avail these benefits while buying the term plan online. There are also options to add riders like critical illness cover, accidental death benefit, accidental total permanent disability benefit and waiver of premium benefit, which helps to enhance the base coverage.
- Singles don’t need life insurance –
This is among other term insurance myths that need to be corrected. Being single and young does not make you free from liabilities and responsibilities. You might have an outstanding education loan, an auto loan that could become a burden on your parents or guardians in your absence. Such debt obligations might push them to liquidate their remaining assets that they might have saved or accumulated. A term life insurance policy in such a scenario will provide good financial back up to your loved ones, leaving them in a less distressing situation.
- Purchasing term life insurance policy is a complicated process –
It is one of the term insurance myths that buying a term life insurance policy is a tedious task and takes a lot of time. However, the fact is buying a term plan online is very simple and can be purchase within few steps. It is like online shopping. You can either visit the insurer website or any insurance aggregator website like BimaKaro.in and buy your preferred insurance policy. If you get confused or want to know more about any policy, then you can seek help from the respective customer care helpline. You can look through multiple policies, fill the application form, submit KYC documents, pay online, and get the policy in a few minutes. As per IRDAI recent guideline, now insurers are even allowed to issue policy documents online.
- Money paid towards premium could be better invested in other avenues –
Money spent on premium could be better-used baking other investments. However, it is ideal for separating your investment and insurance funds as an accumulation of funds takes quite a long time. The outstanding liabilities like home loan, car loans and others could become a burden on the family members in case of the policyholder’s demise, in such case insurance cover plays a crucial role. Therefore, until an individual reaches a breakeven point, he or she must have an insurance cover. Even if there is a sufficient amount of funds, most of it might not be liquid. Hence, during challenging times like medical emergency, the funds which might have saved for children education could get hampered. Therefore, investing in an insurance policy is a must.
- Term life insurance policy is only meant for tax benefit –
This is probably among the significant term insurance myths that people believe in. The premiums paid towards term insurance policy are eligible for tax benefits under sector 80C of the Income Tax Act 1961, but this is not the only benefit it offers and should not be the only reason to purchase it. Instead, term life insurance policy should be considered as a necessity that is required to secure your family during uncertainties. Term insurance safeguards your family from financial constraints in your absence. The sum assured amount takes care of daily expenses, any outstanding debts, child’s education, or medical costs. Also, to get high insurance coverage, you don’t need to pay high premiums. Therefore, it is a profitable deal in simple words.
So, if you have any of these misconceptions in your mind, then say goodbye to them as term life insurance is an unavoidable choice for everyone in today’s time. You should always take help from insurance experts in case of any confusion regarding term policies instead of delaying your decision to buy it. BimaKaro.in is one such platform that offers free insurance guidance and you can also get free quotes for term life insurance policy. Hence, don’t wait, buy a term plan today to protect your family’s future.