Debunking the top 6 myths about life insurance

Debunking the top 6 myths about life insurance

Life insurance is the elephant in the room that no one wishes to talk about. Often linked to death, discussing the same can be daunting and uncomfortable. However, it is much easier to have such conversations and be prepared before the crises hits. 

Even though it is one of the most important financial planning tools that provide for certainties of life such as retirement, children’s marriage or education, and death of the breadwinner, people overlook the benefits that life insurance provides throughout the life of the policyholder. One of the reasons for this is the number of myths surrounding life insurance which often makes people anxious because they doubt the subject or because they procrastinate while making a decision. 

So to help you understand the benefits of life insurance, here we have debunked the top myths about life insurance so that you can make an informed decision for yourself:

  • If you’re young, single, and healthy you don’t need life insurance.

    Life insurance is one such thing that cannot be purchased when it is required, just like “you cannot insure a burning building,” as the saying goes. It must be purchased far ahead of time before you actually need it. Furthermore, the best time to buy a life insurance policy is while you are young since the premiums are lower and you can get good coverage for a much lower price.

    Moreover, if you have any personal or student debt, you can use your policy to keep it from becoming a burden on your loved ones in case you pass away or get any serious medical condition. You can also use it to pay your medical or retirement expenses.

  • You don’t need it if you have a group policy through the work.

    Your current organization will only provide you coverage while you are working for them. Hence, when you quit or retire, the policy will be terminated. Moreover, if the company experiences financial difficulties, the policy can be discontinued or the benefits offered to you will be reduced. In such a situation, you will be stuck and will not be able to receive any help from the insurance coverage when you need it the most.

    Such employee insurance can only be adequate when you are young, healthy, and have no commitments. However, it will not be sufficient to meet the demands of your future family, such as children’s education, marriage, medical emergencies for aged parents, mounting living costs, and so on. On top of that, your work policy may only provide a death benefit. This implies that if you do not have a financial plan in place to cover your expenses after retirement, you will be on your own.

  • It is only useful after the death of the policyholder.

    So, as the name implies, many people believe that life insurance is only useful if the policyholder dies. This is the most common misconception that life insurance only provides death benefits to nominees. However, life insurance is a tool for risk management, and risk must be linked not merely with dying but also with living too long. As today, medical and scientific developments are improving life expectancy how would you manage your costs if you lived more than you have expected and stopped working earlier? Investments are also subject to risk, which can be influenced by market volatility, poor financial planning, or a lack of financial discipline.

    But, insurance can benefit you in securing your financial future. There are several choices available to help you establish a corpus that will allow you to be financially independent during your retirement, pay outrageous medical expenditures, or grow your wealth. You will always gain profit from investing in the right insurance plan based on your needs.

  • Life insurance is expensive, only well-to-do people can afford it.

    This is quite likely the most terrible myth that prevents individuals from purchasing life insurance. As a result, they and their loved ones become helpless in potentially dangerous life situations. At policybazaar.com, you can find term policies that give a whooping INR 1 crore life protection for under INR 490 per month. This is a large sum that will keep your family and dependents safe while you are away. There are also various options with lower premiums that you can personalize to your own needs and goals.

  • You’re too old to get life insurance now or have a pre-existing condition.

    Many insurance companies offer plans that even the elderly can avail of. Retirement plans offer seniors financial freedom even after their income stops. They can invest a lump sum into an Immediate Annuity Plan and start receiving their pension right away. After their death, their spouse can continue to get the pension. Seniors can also purchase whole life insurance plans that provide coverage for the rest of their lives. When they are not present, their loved ones will get death benefits. They can, consequently, guarantee their family or spouse is financially secure at all times.

    Even if you have a pre-existing medical condition, you can purchase life insurance. Many life insurance companies, in fact, provide special coverage for persons who have pre-existing medical conditions.

  • The claim process is troublesome.

    Compensation will be provided if a valid claim is submitted. A number of conditions must be satisfied, for example, the policy must be in effect, the premiums must have been paid, and the information supplied during the application stage should have been correct.

    Now that you are aware of the most widespread life insurance misconceptions, you should not believe them while purchasing a life insurance policy. Make sure you correctly evaluate different life insurance policies, study the policy wording and terms and conditions, and get the best coverage for you. Knowing all of these myths will let you think clearly and make an informed decision whether purchasing, renewing, or filing a claim.

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