Term insurance plans are one of the most cost-effective and helpful types of insurance available. They protect the family and help an individual live a stress-free life in an unknown situation with assured coverage. Many people believe that purchasing some of the best term life insurance plans will cost them a lot.
As a result, it’s not surprising that India’s insurance penetration is less than 4% in comparison to many other countries. There are a lot of misconceptions about term plan insurance in general. It’s critical to know what’s real and what’s a rumor before anyone believes it. Let’s have a look at some untrue beliefs.
Myths And Facts of Term Life Insurance
Myth 1: A Sum Of Rs 1 Crore Is Enough To Cover the Best Term Life Insurance.
Long-term life insurance was well-marketed with Rs 1 crore. As a result, people usually choose this amount when purchasing a plan since they believe it provides adequate coverage.
Fact: Despite its enormous and enticing appearance, this eight-figure sum is a random number with no math. One should now use a scientific method to calculate his term insurance coverage. The initial monthly expenditure (15 times of actual spending), liabilities, key aims, and life events, as well as an individual’s spouse’s pension fund, are all taken into account. Regardless, it is vital to understand the sum assured meaning so, you can make an informed decision.
Myth 2: Term Insurance Policies Are Only Good For Death Payouts.
People frequently think of life insurance as a waste of money because most other life insurance plans on the market don’t pay out anything at all when they mature.
Fact: Life insurance plans are not a waste of money because they do not provide a large maturity amount. After all, a family does need second earning when they are in need of money. This is why it’s crucial to have the best term life insurance. The money that the insurance company will give to the assured’s relatives will ensure that they do not face financial hardships.
Myth 3: If One Is Single, They Don’t Need A Long-Term Financial Strategy.
The best term life insurance is often thought of as a policy that people buy later in life when they marry and raise a family.
Fact: It’s a common misconception that if a person is not married or has no children, they don’t need the best term life insurance. If they have a home loan, car loan, or even a school loan, they don’t expect their family to handle the debt load in the unknown event. In such cases, the life insurance coverage becomes essential even when he is not married nor does not have children.
This does not rule out the necessity for coverage. Before you could understand all this, it is important to understand what is term insurance? This helps you buy it as a necessity rather than just a requirement.
Image Courtesy: Shutterstock
#Myth 4: Term Life Insurance Is Prohibitively Expensive.
Term insurance is frequently perceived to be more expensive than other types of term insurance.
Fact: Nothing could be more false than this. In comparison to some of the best term life insurance plans, a life insurance policy provides a big amount of coverage for a low price.
The total coverage for traditional plans such as ULIPs, endowment policies, money-back policies, and so on is 10% of the annual premium. When one of these plans is acquired for a yearly payment of Rs 20,000, the coverage is Rs 2 lakh. That is a small sum in comparison to an individual’s family’s premature death. Life insurance, on the other hand, provides a significantly higher insurance income for a similar amount when needed. If required one can calculate the amount of premium to be paid or even the tax using income tax calculator.
#Myth #5: Life Insurance Claims Are Frequently Denied.
Many individuals believe that they will not get a settlement for term plan insurance. Many wonder why to pay a monthly charge when there is no expectation of receiving any maturity benefits. They believe that their claim will be denied when they need any coverage. Why should individual invest in a plan like this?
Fact: According to the IRDA’s recently issued annual report, the average death claims payout ratio for insurance businesses for the previous financial year ranged from 85.3 to 99.07 percent. So, for every 100 policies, a maximum of 10-15 was denied, which is not a high percentage. It is thus a good choice to invest in.
Life insurance is thus a suitable plan to invest in. The best term life insurance is now available with all insurance company, and it can be personalized to meet your specific needs. One can increase the benefits of the best term life insurance plan by adding riders, such as accidental death, critical illnesses, and so on. Choose wisely and stay safe with life insurance plans.