Life insurance aids in creating a safety net for yourself and your family. It extends a financial cushion to your loved ones during misfortunes. Besides, it also aids in creating a corpus over a period of time. While there are multiple benefits associated with life insurance, it is also surrounded by some myths. 
 

You must know the myths about life insurance and not misidentify them to be facts- this aids in making an informed decision for securing your family’s future. 
 

 

Top 6 Life Insurance Myths Debunked
 

Myth 1 - Life insurance releases payout only in the case of demise  
 

Life insurance consists of term plans and endowment plans. Term plans are a pure form of insurance where your beneficiaries receive a pre-determined amount when an unfortunate event takes place. Alternatively, an endowment plan is a combination of insurance as well as investment. Depending on your financial goals, and risk appetite, you can choose between market-linked as well as non-market-linked options.  For example, Unit Linked Insurance Plan (ULIP) enjoys a market-driven growth, whereas, guaranteed¹ income plans are independent of market performance. Thus, along with creating security for your family, insurance can also be used as an effective investment vehicle. It can aid in meeting long term objectives like retirement, children’s education or marriage. Hence insurance can provide maturity as well as death benefits. Besides, it also allows choosing the periodicity of the payouts as per need. 
 

Myth 2 - You may buy life insurance at a later stage of life 
 

The COVID-19 pandemic reminds that adversities can set in irrespective of the age of an individual. You must not procrastinate on the purchase of insurance for the older years. Hard times are never considerate of one’s age. Hence it is essential to get life covered before any unfortunate event takes place. Besides, buying life insurance when you are young is rewarded in the form of lesser premium rates.  
 

As known, certain insurance products have an element of saving. It is an established point that early investments are usually accompanied by increased returns. Hence the earlier you start, you allow more time for your funds to grow. 
 

Myth 3 - Insurance coverage of an employer is sufficient 
 

Many employers avail group insurance policies for their employees. However, the coverage is usually available as long as you continue to work there. There is a possibility of a job change for venturing into newer avenues. The group insurance policy may not be portable and hence would cease to exist when you quit the job. Besides, the coverage provided may not be in line with your financial objectives. Hence, even if you are enrolled with a group insurance policy, it is important to buy a separate life insurance cover to suit your customised needs. 
 

Myth 4 - Life insurance can be solely purchased for saving taxes^*
 

The premium amount is eligible for deduction under Section 80C subject to the permissible limits. Also, the maturity benefits are tax-free subject to the compliance of Section 10 (10D). And, death claims are outside the purview of taxation under the said section. Tax^* savings is an added benefit of buying life insurance. But, it should never be the sole purpose of taking insurance. The primary objective of life insurance is to financially take care of your family when you are not around them. Hence, you must use life insurance for creating a cushion for your loved ones. 
 

Myth 5 - Life insurance cannot be personalised 
 

You can customise an insurance policy with the help of riders^#. Riders^# are optional at an additional premium. Riders^# are beneficial as they expand the scope of protection. For instance, an accidental benefit rider qualifies the policy for an additional payout where the death is due to an accident. Similarly, disability and critical illness riders^# compensate you for the loss of income due to a disability or critical illness. Likewise, other riders^# meet different needs. You can avail additional riders^# to suit your personalised requirements and further enhance the insurance coverage. 
 

Myth 6 - Insurers usually reject the claims 
 

This myth holds back many from availing the benefits of an insurance policy. Claim settlement is a seamless process. The claim death settlement ratio³ (CSR) hints at the efficiency of the insurer at settling the claims. For instance, a CSR of 95% indicates a settlement of 95 claims out of 100 claims made. Hence, it is important to comprehend the CSR of the insurer. You must compare and choose an insurer having a good market reputation and a CSR. This eases you from having to worry about the hardships your family might face in receiving the claim. 
 

 

Life insurance facts and statistics
 

There is an increased awareness about the multiple benefits of a life insurance policy. As of Aug 2020, the life insurance segment has collected more than INR five trillion towards gross premium. There has been a rise in the levels of insurance penetration. Introduction of technology has made the purchase of online insurance simple. Larger reach, transparency and product innovation are key factors enabling a seamless purchase online. 
 

 

Tata AIA Life Insurance
 

TATA AIA Life Insurance is one such trustworthy name in the insurance segment. With a market presence of more than two decades, it provides a wide range of products^* to meet your long-term savings and protection needs. 
 

• Protection Savings– Get pure life cover through a term insurance policy. You may seek the advice of a TATA AIA Life Insurance consultant to understand which term insurance is best suited for your needs. 

• Wealth Solutions – Enjoy the dual benefits of insurance and market-linked benefits with Unit Linked Insurance Plans. 

• Savings solutions– Get market-independent savings solutions with life cover through these plans. 

• Retirement Solutions- Have a peaceful retired life while safeguarding your family from adversities with tailor-made retirement plans.  
   

   

To Conclude
 

Who needs life insurance? Everyone who has financial dependents and wants to secure their financial future. The common life insurance myths discussed in this article bring out the importance and necessity of having your life covered. Insurance primarily looks after your family in your absence and also aids in meeting your financial objectives. Hence, you can enjoy manifold advantages associated with protection, saving, investing and tax^*-planning through life insurance. 
 

L&C/Advt/2023/Apr/1166