Even though we live in the era of information, the world of insurance is still shrouded in myths. Some are untrue simply because the ideas behind them are outdated, while others are misconceptions a lot of people have due to a lack of in-depth research. This is quite understandable because grasping all the moving parts of insurance can be difficult. However, it’s important to dispel these myths and know the facts before you select a term policy for your family.
To help you make the right choice, we address some of the most common term life insurance myths below and explain the facts.
Myth #1: Term insurance is only for those who have dependents.
No matter whether you’re single or married, life is equally unpredictable for everyone. If you don’t have a spouse or children, your parents and siblings might be considered as dependents whose future needs to be financially secured in your absence. Term insurance helps them cover the costs of your outstanding debts, unpaid medical bills, funeral expenses, etc.
Additionally, purchasing plans with a longer tenure while you are young will allow you to be prepared when you start a family. The best part is the sooner you purchase one, the lesser your premium amount will be.
Myth#2: The insurance cover provided by employers is good enough.
The single most important element of any life insurance product is consistency. You need to pay premium amounts on time at fixed intervals, or else you risk the policy getting lapsed and your life being uninsured until the payment is complete.
When you rely solely on employer-provided insurance, you may no longer be covered in the event of switching jobs or retiring. What’s more, the coverage amount won’t be enough for your family’s specific needs. It’s always better to buy term insurance on your own conditions because only you can decide what’s best for your loved ones.
Myth #3: Term insurance plans are only useful for death benefits.
While the fundamental purpose of term life insurance is to provide the policyholder’s nominee with death benefits, its function is no longer limited to that. Tata AIA life insurance term plans offer extra features such as the ability to purchase additional riders# to cover critical illnesses or disabilities.
Adversities like these can render individuals incapable of working, and the rider# payout will ensure that your medical expenses are covered without having to drain your savings account. You can choose whether to receive the benefit as a lump sum, fixed income, a combination of both. You can even avail of a waiver of premium payments for the remainder of the policy term.
Myth #4: A term insurance plan is expensive.
The reason term insurance is so popular among people of all ages is that you can avail more sum assured at a reasonable cost. What makes these policies particularly appealing is the fact that by buying early, you can keep your premiums lesser than most life insurance products in the market.
This is especially true for online term insurance policies that offer attractive discounts while giving you the opportunity to analyze, customize, and choose the right term plan with care.
Myth #5: The right coverage amount is 20x my annual income.
You might have read this in several places, but it’s not the complete truth. While 20x your salary is a good place to start, the right coverage amount ultimately depends on various factors such as age, financial liabilities, the number of dependents, future goals, and so on.
Instead of going for a blanket figure, you need to calculate exactly how much your family might need. There are several insurance calculators online that will be able to bring you close to the right amount. Performing a detailed cash flow analysis is essential to determine a coverage amount that is realistic, practical, and takes into account all the necessary variables.
Additionally, you can use an online term insurance calculator to determine the right term plan coverage for you and your family.
Myth #6: It’s better to use my money than buy term insurance.
This is a dangerous thought process because it entirely misses the point of what a life insurance policy can do for you. Market-linked investments will never be risk-free, whereas having an insurance plan involves no risk. The premise is straightforward: if the policyholder dies, nominees will receive a payout known as sum assured. Of course, there are certain caveats on the circumstances of death, but most providers cover common causes.
The claims process of a term plan is simple to follow so that grieving loved ones can receive payouts without a hassle when they need it the most.
Myth #7: Purchasing a term insurance plan is complicated.
On the contrary, you can easily buy term insurance online today. The process involves minimal paperwork and provides you with the added advantage of analysing multiple plans before you select, not to mention allowing you to avail of the plan at discounted rates.
Long gone are the days when you had to visit an insurer and have lengthy conversations with agents to understand and purchase policies. Now you have a long list of trustworthy sources that simplify the meaning of term life insurance and tell you what to look for while buying.
Since you have a clearer picture of how term plans work (or more importantly, how they don’t work), you can use this knowledge to pick the right policy for your family’s needs and goals. Make sure to do proper research about the term insurance plan and read the terms carefully.