Most Common Term Insurance Myths

2024-08-02

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Unlike the ancient Greek myths that provide resourceful information that positively shapes modern beliefs, insurance-related myths are nothing but conjecture.

Consider this: Saurabh is a 34-year-old man who works as a corporate lawyer in a reputed multi-national. He lives with his wife Divya, 2-year-old son Shaurya and 3-year-old daughter Trishala. Saurabh is planning to buy a beach house in the next two years and dreams of sending both Trishala and Shaurya overseas to pursue higher education. He is the sole breadwinner in the family. While Saurabh does invest a part of his income, he doesn't feel the need to get himself insured. Why you ask? Saurabh believes he's healthy and too young to waste his money on a term insurance policy, since he is optimistic about life plus he feels term insurance does not give any returns. Just like Saurabh, if you may too tend to believe in these general notions related to insurance. Why general and why myths, read below to find out the reality.

I'M YOUNG, I DON'T NEED INSURANCE

Reality: Ever wondered why insurance ads only feature middle-aged and old people? It's probably because 'insurance is for old people' is the most common insurance-related myth that exists. As youngsters, you might assume that you don't need insurance as long as you are youthful and don't have any responsibilities. But the truth is, buying life insurance at a young age can help you leverage lower premiums, as premiums tend to increase with age. Asides, since most likely you won't be having dependants at early age, it would be easier for you to spare a nominal amount for the premium every month or year.

6 Common Term Insurance Myths & Facts - Cana

TERM INSURANCE IS TOO EXPENSIVE

Reality: If you can assure your family's stability with a monthly or annual premium, isn't it worth considering? It's important to understand that term insurance is not an extravagance. Also, did you know that you could buy a term plan that offers a cover of Rs 1 crore at merely Rs 365 per month? That's less than what you might spend on a fancy dinner or a movie outing with family! Yes, term plans offer extremely affordable premiums that make them a great option for youngsters.

If you're looking for one such inexpensive term plan, try iSelect. It is a pure protection plan that offers life insurance and terminal illness cover along with optional additional cover against accidental death/disability. With iSelect, you can select the desired benefit payout option whether it's lump sum, lump sum plus monthly payout, or monthly income. You also get the option to increase your life cover as your responsibilities increase.

INSURANCE IS FOR MARRIED PEOPLE

Reality: Ever thought of the legacy you would leave behind if something were to happen to you? If you're single and feel you don't need insurance, think about the unpaid expenses you would leave behind if something happens to you. You wouldn't want to burden your family with them, do you? Moreover, wouldn't you want your parents and siblings to be financially stable in any eventuality? Life insurance can give you peace of mind that your loved ones are going to be fine even without you, so single people need insurance just as much as their married counterparts.

I'M HEALTHY, WHY DO I NEED INSURANCE?

Reality: We can't ignore the uncertainties of life. Even if you are young and healthy, you're not going to remain that way forever. And the sole purpose of life insurance is to be prepared for any unforeseen event so you can provide your family with support after you're gone.

TERM PLANS OFFER ONLY LUMPSUM PAYOUT

Reality: Contrary to this popular belief, a term plan provides multiple payout options for you to choose from. Based on your family's financial needs, you can choose between lumpsum, lumpsum plus monthly income, monthly income over a fixed term or monthly income till the end of the policy term payout options.

THE COVER ONCE OPTED FOR IS FIXED

Reality: As you move ahead in life, your responsibilities are bound to increase and so should your life cover. With a term plan, you get the option to increase your life cover after a particular number of years to meet your growing financial needs.

These are some of the many common myths around term insurance plan. If you need any more guidance to understand the subject, we would be happy to help. You can reach out to us here.