The misinterpretations around a term insurance plan can often discourage people from considering them as vital instruments of financial planning. This is due to the several myths that go against the purpose of insurance, which is basically risk management at lowest possible cost. However, in reality, buying a pure term insurance policy is considered one of the most cost-effective methods of getting your life insured. Here, we clarify some of the common misconceptions about term life insurance, especially about what they are and why they play important roles in our lives.
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Top 5 Term Insurance myths busted:
Myth 1 – Term plans are unprofitable and a waste of money
As term plans provide financial protection to your family in case of your untimely passing, they are not that popular because if you survive the policy period, you get nothing in return for the premium paid. However, the higher protection that you get at lower costs has a much higher value in managing financial risk for your family. At a nominal cost, the complete well-being of your loved ones is assured in your absence. Not only the nominee but also the policyholder can profit from a timely investment in the right type of life insurance plan.
Myth 2 – Young and healthy people do not need term insurance
Even if you are young, unmarried and don’t have any kids, it doesn’t mean that you don’t need life insurance. Life is full of surprises and uncertainties. An accident can occur at any time and potentially clear a large chunk of your savings. Moreover, the earlier you buy term insurance, the lesser premium you would have to pay for a large sum assured.
Myth 3 – Buying a term policy too late in life is not advantageous
The premium for an older person will be higher in comparison to a younger professional who applies for a term insurance plan. However, a term insurance policy taken after 50 years of age can still provide financial independence for a person after he/she retires. Senior citizens can also get coverage for life and their loved ones will receive the ‘death benefits’ following the policyholder’s demise. This can ensure that their family remains financially secure at unprecedented times.
Myth 4 – All term insurance plans are the same and the cover cannot be increased
One of the major myths about a term plan is that the plans cannot be customised. However, that is not true as term insurance plans can be customised as per your needs. You can even add to your term plan to get more benefits and the add-ons can range from the ones accelerating the pay-outs of the base or offering additional cover.
Myth 5 – Purchasing term insurance online can be cumbersome and time-consuming
People are often hesitant to buy term life insurance only because the process of buying them through an offline channel can be quite lengthy. However, thanks to the power of technology and the internet, today, you can buy term insurance online without any hassles. Offline procedures will require one to fill up several forms and submit various documents, but it takes a few clicks to buy an insurance policy online from the comforts of your home. You can also calculate the premium that you need to pay by using online term insurance calculators.
In conclusion, a term insurance can be considered as a pure life cover that can provide you high coverage for a low premium. Hence, it’s best to steer clear of the myths around it and know the appropriate policy that you require.