The financial market offers you a variety of life insurance plans in which term life insurance is considered to be the most essential and straightforward product. As it started gaining popularity, the market heard various myths about term insurance, which are still considered to be true by the general public.
That’s why people always consider a second thought before buying a term insurance plan – even if it offers them never-ending advantages. Another reason for increasing myths about term insurance is the fact that life insurance isn’t an interesting topic, and people don’t discuss it enough.
With that said, you may not want one of your most important financial decisions to be influenced by some wrong facts. Below is a list of six common myths about term insurance debunked to offer you greater financial transparency:
1. Term insurance isn’t worth buying too late or too early in life
When it comes to a term insurance plan, there’s no such thing as too early or too late. On the contrary to the myth, it’s even more beneficial to have a policy at an earlier stage of life. This allows you to purchase it at the cheapest rate and gain the most out of it over time.
Moreover, even if you’re living in your old age, you can still avail several financial benefits with a term insurance plan. These plans are usually much more affordable in comparison to other insurance plans, and some term plans even offer you a cover of up to fifty lakhs, even at the age of 40 years.
2. Term life insurance plans can’t be customized
There’s a very interesting myth that revolves around term plans that only contain a fixed feature and can’t be customized, even when the policyholder dies during the tenure, and their family will gain the sum assured to the policyholder.
However, it used to be true a long-time ago and things have changed with growing competition. Nowadays, the majority of term insurance plans allow you to customize them according to your needs. To get more benefit from your term plan, you can also add accidental death and critical illness cover.
Additionally, even if you’re not willing to purchase the plain term plan, you can choose to have other options such as premium term plan, convertible term plan, and increasing or decreasing term plan. Contrary to the myth, the choices are nearly endless.
3. The cover can’t be increased after purchasing the insurance
With the ever-evolving changes in income and life responsibilities, it’s surely a no-brainer that you can (And you should!) increase your cover with time. There are some specific plans such as the increasing term insurance plan that allows you to increase your policy coverage at a defined time in the future.
Although the terms and conditions for the premium payment may differ based on your requirements, it’s certainly a strong recommendation for people in their thirties to purchase a term plan with a cover enhancement option to tackle the growing changes in life.
Apart from the increasing term plan, you can also increase the cover in your existing policy by doing a top-up or purchasing another policy to enhance the cover of your life. For instance, if you’re getting married, you can increase the sum to tackle the responsibilities associated with your married life.
4. Insurance without return isn’t worth it
If you’re among the people who believe that an insurance plan that doesn’t offer you any returns isn’t worth your investment, prepare to get your facts right. A term insurance plan is the only policy that offers you the highest life coverage at an extremely genuine price.
Although it doesn’t offer you any return on the premium that you pay, the additional benefits are surely worth your time and money. It acts as a giant umbrella of financial security for you and your loved ones and keeps you protected at a nominal cost.
With just a monthly premium of INR 500, you can gain an insurance cover of INR 50 Lakhs even at the age of 25. Moreover, if you also choose to opt-in for rider benefits, you can easily enjoy the returns of premium in your policy term.
5. Term life insurance plans are expensive
People often believe that term life insurance plans are more expensive than other plans in the financial market. However, the term life plan itself markets it as an insurance policy that offers high coverage at very low premium amounts in comparison to other insurance policies.
Talking about the traditional insurance policies, they only offer total coverage of up to 10% of the yearly premium amount, in markets like money-back policy, ULIP, and endowment policy. For example, if you pay a yearly premium of INR 20,000, you’ll only get a cover of two lakh rupees.
Such a low amount won’t allow you to help your family in case of an emergency. When comparing term life plans and other insurance plans, you’ll realize that the former offers a much higher sum in case the policyholder dies during the tenure of their policy.
6. A lot of paperwork is required to get a term life policy
With the rising number of internet users in India, almost every life insurance company has made an online presence by carrying out a major part of their operations digitally. This allows you to check and compare plans through your smartphone, and even purchase them on the go.
The most prominent part – there’s no paperwork involved in the process, which makes the process a lot more convenient, fast, and easy. On top of that, companies also offer expert consultation to help you purchase the best policy according to your needs.
The Takeaway
When it comes to an insurance plan with a higher premium at an affordable rate, the term life plan is certainly a perfect match for you. With the quick rundown of myths about term insurance, you may have corrected your facts to make the most out of your insurance plan.
