Term insurance has numerous benefits, but many often second guess the decision. It is primarily due to the various myths associated with term insurance. Hence, it feels right to go ahead and bust some of them to clear the air and secure our future.
Here are 8 term insurance myths that have been busted:
- If there is no return, then the term plan is not worth an investment
- Will the insured amount be paid?
- Age factor doesn’t play any role in buying a term plan
- Benefits can be availed just after death; hence it isn’t worth the investment
- Having a term plan would be expensive
- Maintaining a policy is complicated
- Term plan cover cannot be increased
- My company provides group insurance; I don’t need a term plan.
Myth #1: If there is no return, then the term plan is not worth an investment
Reality: A term plan provides you with the highest coverage on the lowest premiums. The absolute truth is, there is no return on the paid premiums, but it attracts various tax deductions for the same. So, it does help save money. It also provides financial security for your family when they need it the most.
Myth #2: Will the insured amount be paid?
Reality: Before purchasing a term plan, you must be wondering what if your claim gets rejected? Many insurance companies’ claim settlement ratio ranges between 85 to 99%. So if we look at the claims range from that perspective, out of every 100 policies, only 1 to 15 claims could not qualify, which isn’t that a big rejection rate. So you can be rest assured that your insured amount will be paid.
Myth #3: Age factor doesn’t play any role in buying a term plan
Reality: Someone rightly said that it’s not late than never, but it’s better to lock in term plans at low rates to avail maximum benefits. You can do so by getting it as early as possible. Even if you have crossed the age of 40, it’s not too late to buy a term insurance policy for yourself and your family at relatively affordable prices.
However, several benefits can be in your bucket by starting investing early in life. Along with the benefit of paying lower premiums, you can avail tax deductions earlier in your career. Not just that, you will be insured with a large cover with much lower premiums.
Myth #4: Benefits can be availed just after death; hence it isn’t worth investment
Reality: Yes, this is true. The major objective of a term plan is to provide financial assistance to your dependents after you. Still, it is a myth that insurance policies just provide benefits after death. You can even avail of maturity benefits if you survive the term of the policy. Also, being alive, you can avail of taxation benefits, accidental benefits, and coverage for major critical clinical diseases (if covered in your term plan).
Insurers often waive off your future premium in case of serious disability, but you will still get the coverage. However, these benefits come with add-on charges along with your premium amounts.
Myth #5: Having a term plan would be expensive
Reality: Many assume that buying an insurance plan would affect daily expenses and living standards as it is too expensive. No, that’s not true; the reality is if you study and compare the policy terms in-depth, a term plan can be an inexpensive investment. For example, if you buy a plan when younger and don’t consume tobacco, your premiums would be much lower. Some insurance companies even offer the provision of monthly payments.
Myth #6: Maintaining a policy is complicated
Reality: With the help of technology, everything we need is just a click away. You need not visit insurance companies in person to buy a term plan. Nowadays, the process of purchasing and maintaining a term plan has become easy and convenient as the entire process goes online. You can easily check and compare term plans offered by different insurance companies on their websites, based on your needs and expectations.
You can easily calculate the premium to be paid, as most insurance companies provide you with a premium calculator on their websites. Even if you are still confused, you can just decide and select a few things like the sum assured, riders (if any), your age, number of dependents, any diseases you are suffering from (if any), or other required details and here you go! Your customized term plan is ready.
You can get a quote online for your selected options, and also you can make your payment online. Just a single visit is required for KYC purposes; some insurance companies offer doorstep visits even for that.
Myth #7: Term plan cover cannot be increased
Reality: One of the myths regarding term insurance plans is that the cover cannot be increased. However, the reality is that as time passes, you can redesign your term plan too.
Suppose if you are investing into a policy at the age of 25, based upon your income structure when you reach the age of 35 or 40, you might feel the need to increase the cover. You can do that by amending your term plan, but it would increase the premium amount. This saves the hassle to buy a different term plan altogether. Many insurance companies give you the option to amend your term plan policy in between the duration of the policy.
Myth #8: My company provides insurance; I don’t need a term plan.
Many feel that employer-provided insurance plans are good enough for them. But there are some bottlenecks to this assumption. First, these plans discontinue once someone leaves the job. Also, in many cases, the coverage provided might not be adequate to cater to your needs. Hence, buying a separate plan is always recommended to ensure your priorities remain secure irrespective of employment status.
Long story short, let go of assumptions regarding term insurance and get it for yourself. It is a worthy investment that you should secure as early as possible.