From term insurance tax benefit to its significantly affordable pricing, a term plan has many features that have made it a popular choice as a life insurance policy.
It is a simple plan that ensures your dependents’ financial safety in case you cannot be there for them. Yet, there still are certain myths about term plans that some people believe.
Here, we debunk eight misconceptions to help you understand how the term policy works.
8 Term Life Insurance Myths Debunked
#1. INR 1 Crore Policy Cover Is Large Enough
Many believe that an INR 1 crore cover is sufficient for your family. However, the truth is that you must choose the cover based on your needs.
You have to start by calculating your regular expenses, future financial goals, and monetary liabilities to get a clear idea about how much money your loved ones will need to sustain their lifestyle.
After analyzing all these factors, you can choose the cover accordingly.
#2. Term Policy Offers No Value, As It Only Pays The Death Benefit
Term policies do not offer any maturity benefit, making some people question if paying the term insurance premium is worth it.
However, you should understand that the primary purpose of a term life insurance policy is to protect your loved ones financially in your absence. As you can buy a large term policy cover at an economical price, it indeed is worth purchasing the plan.
#3. Single People Do Not Need It
If you feel that you do not require a term policy because you are single, you need to think again. Every earning person has at least some liabilities like loans.
You do not want your parents or other family members to worry about the dues in your absence. A term policy cover will help with that.
#4. It Is Costly
Due to its large cover, many think that a term policy will be expensive. The reality is exactly the opposite.
While you have to pay an annual premium of INR 20,000 to buy a traditional life cover of INR 2 lakh, a term policy can offer an INR 1 crore cover for the same price or even lower.
#5. It Has A Large Rejection Rate
This is another false assumption. The Insurance Regulatory and Development Authority of India (IRDAI) informs that, on average, insurance providers successfully settle over 85% of the total claims submitted. This means they reject only 15% of claims, which is a low number.
#6. You Do Not Require It If Your Employer Offers A Group Life Insurance Plan
Many companies provide group life cover to their employees, but it is often not enough. You need to compare its cover to your monetary needs and decide whether it is adequate for your family’s requirements.
Also, the cover will not be available if you change your job, as there is no certainty that your next employer will provide you a life cover. So, it is advisable to invest in a term plan. Use a term insurance calculator to compare different plans online and find one that offers sufficient cover at a cost-effective rate.
#7. You Cannot Modify A Term Plan
People think that term plans are not customizable. However, the fact is that there are multiple ways wherein you can personalize the policy according to your requirements.
For starters, you can buy additional riders, such as critical illness or accidental death benefits. Moreover, you can increase or decrease the cover with your changing needs.
#8. Purchasing It Is A Lengthy Process
If you think buying a term policy requires a lot of time and filling many forms, visit your preferred insurer’s website, and you will be pleasantly surprised.
To purchase a term plan online, you only need to share a few personal and financial details with the provider. It takes just a few minutes to complete the process and pay online.
Hopefully, the above explanations have helped you understand how simple and crucial it is to buy a term policy. With this plan, you get a substantial cover value and can avail of term insurance tax benefits at a reasonable cost.