A life insurance policy is a useful financial product that can help support your family financially even in your absence. However, despite the many benefits that it offers, many individuals often don’t give importance to buying life insurance. There are many reasons why a country so populous as India, is underinsured.  In this article, we’re going to take a look at a few of the most popular reasons.
Top 5 myths due to which people in India don’t buy life insurance
Despite the long history of the insurance industry in India, many people in the country remain uninsured or underinsured. There are many reasons and misconceptions behind people being unwilling to invest in a life insurance policy. Here are the top few:
1. They believe that nothing untoward may happen
This is one of the most common reasons that people may have for not investing in life insurance. They tend to believe that since they’re in very good health today, nothing is likely to happen to them in the future. And therefore, the need for insurance does not exist.
However, the truth is that although good health can extend your life expectancy, it may not guarantee a long life. The future may be uncertain, and life can be very unpredictable. Despite being in the best of health, there are many unexpected events that can take place, leading to loss of life in an instant.
Therefore, it is important to keep your family financially secure in the face of such incidents. And one of the preferred way to do that would be by considering purchasing a life insurance plan.
2. They tend to put it off for later
Procrastination is another major reason for Indian individuals not purchasing a life insurance policy. Many people think that getting a life insurance plan when they’re young is of little to no use, since they may not have many dependents at that life stage. And so, they tend to delay the purchase till a later point in time.
However, the insurance premiums are heavily dependent on your age and other factors. So, the later you purchase life insurance, the more the premiums that you would have to pay. That is precisely why it is important to purchase an insurance plan for yourself as early as possible. That’s not all.
By delaying the purchase of a life insurance policy, individuals are also putting themselves at some degree of risk. For instance, let’s say that you put off purchasing life insurance until after you reach 30 years of age. But in the unfortunate case that something untoward happens to you before you buy a life cover, your loved ones would be financially unprotected.
3. They don’t understand the risks
Lack of awareness of the kind of risks involved with not purchasing a life insurance plan is another one of the many reasons for the dismal insurance rates in India. Even today, with increased internet penetration, the majority of Indians are unaware of the financial risks that they may be putting their family in by not purchasing a life insurance plan.
Let’s take an example to help drive the point home. Take the case of an individual who is the sole earning member of a family of 5. If something untoward were to happen to the said individual, the entire family would lose the financial capacity to take care of themselves.
Not only would their life goals be derailed, but even meeting their daily expenses may become next to impossible if they have no other source of income to rely on. However, if the individual has a life insurance policy in place, the payout that their family would receive upon the said individual’s death can be used to meet their everyday needs and achieve their life goals.
4. They don’t understand the different life insurance products
In India, there are multiple types of life insurance products available. From term insurance and whole life insurance to endowment plans and Unit Linked Insurance Plans, the choices are plenty. For an average individual, this might seem daunting and can even lead to confusion. Not taking the time to understand the different types of life insurance products is one of the many reasons people may not buy a life cover.
Making the effort to understand the different types of life insurance is crucial, since it helps you appreciate the importance of a life cover and get more clarity on the many benefits offered by different kinds of life insurance plans. Also, thanks to the internet and the increased levels of transparency, getting to know about life insurance and its various types are easier than ever.
5. They already have a life insurance plan provided by their employer
Quite a few organizations in India provide their employees with life insurance as part of the company’s group life insurance plan. This is one of the many common reasons that Indians may have for not purchasing an individual life insurance policy.
Although the policyholder’s family gets a death benefit payout from a group life insurance plan, it may not be enough to properly take care of their needs. Also, if the individual leaves the organization, the benefits under the employer’s life insurance plan cease to exist. However, by purchasing an independent life insurance plan on top of the group life insurance, an individual may secure their family financially and ensure that adequate amount of coverage is in place.
The importance of a life insurance policy has always been understated. It is one of the preferred financial tools that can not only secure the financial future of your loved ones, but can also help you create wealth over the long term as well. So, now that you know the above reasons are not excuses to put off buying a life cover, make sure that your loved ones are financially secure.