Term insurance policies are critical for financial stability, but there are various misunderstandings. These beliefs cause many people in India to hesitate to get term insurance. In this post, we’ll debunk some of the most popular myths to help you make more educated decisions. If you’ve ever utilised a term insurance calculator or contemplated purchasing a term insurance policy, it’s time to distinguish reality from fantasy. Let’s start debunking these falsehoods one by one.
1. Term Insurance is Expensive
Myth: Term insurance plans are expensive and not easily accessible for an average person.
Fact: Term insurance is one of the cheapest forms of insurance people can get. Premiums are less when compared to other life insurance products because term insurance is purely a risk cover with no investment element.
2. Only the Breadwinner Needs Term Insurance
Myth: A term insurance plan is necessary only for the first earner of a family.
Fact: Homemakers and secondary earners should also have term insurance. While their contribution is not monetary, they have substantial economic value for the family.
3. Young people don’t need term insurance
Myth: Young individuals don’t need to worry about term insurance.
Fact: It is best to buy a term insurance plan when you are young and healthy. Premiums are lower at a younger age and increase with age and potential health issues.
4. Term insurance does not cover natural death
Myth: Term insurance is only limited to the death caused by an accident.
Fact: Term insurance pays the amount in case of natural death, death due to illness, and death due to accidents unless the policy document contains a clause to the contrary.
5. Term insurance payouts are taxable
Myth: Term insurance plan offers a death benefit which is liable to tax.
Fact: The amount received under a term insurance plan is free of tax under Section 10(10D) of the Income Tax Act in India.
6. Insurance providers often reject claims
Myth: The common practice is that insurers deny term insurance claims.
Fact: If the policyholder has provided accurate information and the policy is active, insurance companies have a high claim settlement ratio, meaning most claims are honoured.
7. Term insurance is only for people with dependents
Myth: Term insurance is only required for those who have dependents.
Fact: Term insurance is suited for those who don’t have dependents to support but can help pay for debts, medical bills, or funeral expenses.
8. Employers’ life insurance coverage is sufficient
Myth: Employer-offered life insurance is adequate.
Fact: Coverage offered through an employer is usually inadequate and is lost as soon as one is let go. A personal term insurance plan guarantees uninterrupted protection.
9. Women don’t need as much coverage as men
Myth: Given this perspective, it is quite clear that women need less life insurance than men.
Fact: Women should also have such a level of financial security as men. Both their economic input to the family and the future should equally be protected.
10. All term insurance plans are the same
Myth: It is important to know that all term insurance plans are identical in the sense that they all come with the same advantages.
Fact: There are various features and riders that are provided in different term insurance plans. This is why it is crucial to compare policies, and this can be done with the help of a term insurance calculator.
11. Term insurance is a short-term policy
Myth: Term insurance benefits are limited to a short period of the policy.
Fact: Term insurance can provide coverage for the term of up to 30-40 years, thus providing financial support for your family in the long run.
Ending note
Understanding term insurance policies is critical to making sound financial decisions. By dispelling these prevalent fallacies, we have demonstrated the significance and advantages of term insurance. It is inexpensive, offers complete coverage, and is necessary for everyone, regardless of age, gender, or job situation. Whether you are young, single, or have pre-existing problems, there is a term insurance plan to meet your needs. Use a term insurance calculator to determine the best plan for your family’s financial future.
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