Term Insurance and Myths Around It

Term Insurance and Myths Around It

Term insurance is a life insurance policy that is solely designed to provide individual financial protection. Premature death is covered under this policy. The plan provides a guaranteed death benefit if the insured dies within the plan’s term. If a family’s breadwinner invests in a term insurance plan and then dies early, the term insurance policy helps to compensate the family for the financial loss. In the absence of the breadwinner, a term insurance plan provides financial protection to the family and helps them meet their financial needs and goals.

Term Insurance is the best thing an individual can invest in, unfortunately, several myths and misconceptions have discouraged people from exploring and understanding the additional benefits this insurance has to offer. So, here are a few term insurance myths that you might have heard from some relative or a friend and should not fall prey for.

1. Term insurance is expensive

This is likely the most common misconception that prevents consumers from considering term insurance. Term plans, on the other hand, offer a greater amount of insurance coverage for a lower payment. Term insurance rates are much less expensive than other forms of insurance plans. Premiums for term insurance are determined by a variety of criteria, including:

  • Age of the covered person
  • Sum assured
  • Policy period
  • Term of premium payment
  • Several additional benefits that are included in the term plan

2. Term insurance only helps in saving money on taxes

Many individuals assume that term insurance is largely used by insurers to save money on taxes. This is also a general misconception. The ability to save money on taxes is a byproduct of term insurance. A term insurance policy’s major purpose is to financially cover your family in case of an emergency or any mishap. Thus, tax savings should be considered a bonus rather than the primary goal of a term insurance policy.

3. A term insurance plan is required just for the family’s sole provider

Another popular misconception in India, particularly among stay-at-home parents, is that insurance is unnecessary. Every person’s existence has an economic value, whether she is a housewife, a worker, or a child. So, each family member must have sufficient term insurance.

4. Group insurance is sufficient

If you lose your job or are downsized, you are left unemployed and unsecured for this particular period. It is advisable to choose a term plan that covers you and your entire family.

5. Term insurance is for senior citizens

When it comes to term insurance, there is no such thing as a "right time." Your age or financial situation doesn’t matter as it is never too early or late to buy a policy. After all, tragedy knows no bounds in terms of age, gender, or cast. Younger people considering term insurance will be pleasantly surprised by the low premiums that provide advantages over time. Individuals under the age of 40 can purchase term insurance for as little as Rs 10,000 per year for a cover of Rs 50 lakhs.

6. Purchasing term insurance online can be risky

Term insurance plans, like most things linked to insurance, have gone online. There are several advantages to getting insurance online. First and foremost, you may compare and choose from a variety of insurance companies to get the one that best suits your needs. You will not be pressured into purchasing something you do not require. Furthermore, taking the internet route eliminates any middlemen (agents) who are eager to gain from your insurance purchase. This can greatly lower the cost of insurance and save you money on your monthly premiums.

Before buying term insurance, do your research properly and understand what you are signing up for. Understand your goals and requirements and choose wisely. Term insurance guarantees that your loved ones will live a decent life even if you are not around. Remember, this isn’t just about you; it’s about your family too. So, what are you waiting for? Protect your family right now!

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