People have varying opinions about buying a life insurance policy. Some people think it is a necessity, and others believe otherwise mainly because they lack knowledge about the product. In this write-up, we debunk the myths surrounding the term life insurance plan.
Different people have different opinions about insurance policies and ‘term insurance’ is no different. It is probably one of the most underrated and misunderstood insurance policies in the market. A lot of people don’t understand the significance of term insurance and have several misconceptions about it. Although it is the purest type of life insurance policy, it has never been popular because people don’t know its benefits. Read to know about the various myths surrounding term insurance that you must ignore.
Myth – Single/Unmarried people do not need term insurance
This is by far the most popular myth about the term insurance plan. Even if you are unmarried, you must still invest in a term insurance policy if you have any underlying debts like a home loan, credit card bills or a motor loan. In the event of your unfortunate and untimely demise, you surely would not want your beloved family members to bear the burden of repaying the debts. Also, if you are the only breadwinner in the family, you would want the dependants to have a regular source of income after you are gone. This is where the term insurance is important, and it pays your family a lump sum amount (the sum assured) in case of your demise.
Myth – Old-aged people cannot buy term insurance
Although it is advisable to buy a term insurance plan when you are young, many insurance companies allow you to buy a policy until you reach 65 years. Today, most insurance companies in India offer term insurance plans that provide coverage up to 85 years. So, yes, even if you missed buying a term plan earlier, you can still buy one in the old age.
Myth – Term Insurance plan is expensive
Term insurance is one of the most inexpensive types of life insurance; you can buy a term insurance plan with a premium as low as 500 INR per month.
Myth – Term insurance offers only death benefit
The benefits provided by a term insurance policy depends on the type of plan you choose. It allows you to select various add-on covers. You can purchase additional protection for additional benefits. For instance, you can buy a personal accident add-on to cover the risk associated with any physical damages caused due to your involvement in an accident. You can also buy a critical illness add-on that offers a one-time lump sum payment to the family in the event of your demise due to critical illness. Additionally, you can also sign up for a return of premium plan where the insurance company returns the premium amount in full if you outlive the policy term. However, you must know that for every add-on you choose, it comes with an additional cost and it would increase your premium amount.
Myth – The insurance cover offered by the employer is sufficient
As an individual, you would surely want to grow in your professional sphere and reach greater heights. You must ask yourself, are you going to work in the same company all through life? Maybe NO. A group insurance cover offered by the employer is only valid as long as you are employed with the organisation. Besides, the coverage offered is often inadequate to suit individual needs. Therefore, it is paramount that you buy term insurance at a personal level and get sufficient cover to suit your family’s needs.