Life Insurance Myths Debunked
If financially protecting your family’s future is your priority, then a life insurance policy is one of the preferred ways to do it. So, what is life insurance? At the core of it, it is a contract between an insurance provider and an individual. And according to the contract, the insurance provider provides a life cover of a predetermined sum of money to the individual for a specified period of time.
If the said individual dies within the specified period of time, the insurance provider will pay the predetermined sum of money to the deceased’s nominees. And in exchange for receiving this life cover, the individual is supposed to make payments regularly in the form of premiums to the insurance provider.
Decoding the Life Insurance Myths?
Despite being a simple concept to comprehend, there are several misconceptions about life insurance floating around, which tend to hold people back from investing in them. In this article, we’re going to be debunking some of the most popular myths surrounding life insurance. Here’s a few of them.
1. Life insurance is expensive
This is one of the biggest misconceptions about life insurance that people tend to believe in. Contrary to popular opinion, life insurance is not very expensive if you choose to purchase it when you’re young. The life insurance premiums only start to get expensive as you age. In fact, pure term insurance, which is a type of life insurance, is extremely cost effective and offers high coverage for affordable premiums.
2. Life insurance can only be purchased offline or through an agent
Even with all the technological advancements of this age, there are many individuals who still believe that life insurance can only be purchased offline or through an agent. This, however, is simply not true.
You can purchase life insurance plans online by simply visiting the website of the insurance service provider, filling in the appropriate application, and making the premium payment online. In fact, some insurers even quote a lower premium figure for online insurance plans as well.
3. Life insurance claims are frequently rejected
This again, is one of many life insurance myths that are simply untrue. As long as the cause of death of the policyholder is covered under a life insurance plan’s terms and conditions, and there is no valid reason to reject a claim, the claim will be accepted.
There may be some common reasons for a claim to get rejected. Some of them are - if there’s a mistake or omission when it comes to filing the claim application and its relevant documents, the claim may be rejected. However, if there’s no mistake or omission while filing the insurance claim papers, it will be accepted and the funds be disbursed to you, if any material facts have been hidden at the time of taking the policy, then the claim may get rejected etc.
4. All life insurance plans are the same
While all life insurance plans may look the same, reading into the Sales brochure will tell you that it is not so. Each type of life insurance varies from one another in terms of their features, the benefits they provide, their approach to savings or investment, and the premiums that they charge.
For instance, term insurance and an endowment plan, while both of them provide death benefits, are not one and the same since a pure term insurance plan doesn’t provide maturity benefits, while an endowment plan does.
5. Life insurance is useful only for tax saving purposes
This is another one of the misconceptions about life insurance. Contrary to popular opinion, life insurance is not just useful for saving tax, although it is one of the many benefits that it provides.
Infact, a life insurance plan is also a preferred tool used to provide financial protection to one’s family. Additionally, some life insurance plans also combine insurance with savings and market-linked investment, providing you with an avenue to create market-linked wealth in the long-term. With so many benefits on offer, treating it like it is for tax saving purposes alone is a myth that is propagated even today.
6. Young individuals don’t require life insurance
This has consistently been one of the reasons that young individuals give for not investing in a life insurance plan. They feel that since they’re young and of good health, paying life insurance premiums is something that’s of very little use.
However, what they fail to realise is that life can be quite uncertain and that tragedy can strike at any time. Life insurance is all about accounting for this uncertainty by providing one’s family with adequate financial protection in the event of the said individual’s unfortunate demise.
That’s not all. Purchasing a life insurance plan when you’re young tends to be more affordable than when you’re older. This is all the more reason why young individuals and professionals may invest in life insurance.
And there you have it - 6 of the most common misconceptions about life insurance clearly debunked. It is absolutely essential to address life insurance myths as and when they pop up. This way, we can not only increase the awareness of life insurance and their benefits, but also help individuals make the right decision.
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