We all live with myths in our day to day lives. Some say that the bulls hate the red color and so you should avoid coming in front of the bull when you dress in a red outfit. LOL! Like really? Well, the fact is, bulls are color-blind and they only react to the bull fighter’s motions due to a threat.
There are many other common myths which people fall prey to. For instance, a term life insurance plan is the most important type of life insurance plan. Yet, not many individuals buy a term plan, believing in various myths associated with it. Some feel that a term insurance plan is a waste of money as no benefit is paid in case of maturity while others feel that a smaller sum assured is sufficient. Do you also blindly believe such myths that come along with a term insurance plan?
If you do then it is time for you to remove the blindfold and know the truth. Here are some common myths about term insurance plans vis-à-vis the reality:
Myth – I am young and healthy, so I don’t need a term insurance plan
Fact – It is true that being young and healthy, you do not face any immediate risk of death. However, accidents are uncertain, aren’t they? Is there a guarantee that if you are young you wouldn’t face the risk of accidents? Uncertainties can happen at any age. These uncertain perils might also cause death. So, a term insurance plan should not be avoided if you are young and healthy. In fact, it should be bought at a younger age to enjoy lower premiums. Moreover, when you are ill and face the risk of death you wouldn’t be able to get a term insurance policy at all. So, buy one when you are healthy. Not only this, if you have opted for an education loan and are still paying the EMI’s, your family would have to repay the loan on your sudden demise. Therefore, you should opt for a term insurance plan at a younger age.
Myth – Term plans are a waste of money because they don’t have a maturity benefit
Fact–Though term plans usually don’t pay any maturity benefit, there are certain plans which return the premiums paid on maturity. So, when you buy a return of premium plan, you don’t waste any money. Generally, term insurance plans offer. The coverage offered by a term insurance plan is indisputable, as compared against other life insurance plans available. Remember, term insurance offers a wider coverage at a minimal premium. It insures the financial risks that might arise in your absence. This reality itself is a big return certainly.
Term plans are protection-oriented plans, the main aim of which is to protect your family’s financial future in your absence. As such, term plans cover only your risk of death and provide a very high coverage level at very low premiums. Other insurance plans have a saving element where they pay a death benefit or a maturity benefit. However, the level of protection offered by a term plan is unparalleled. No other insurance plan or investment instrument for that matter provides such a high coverage at such affordable premiums. If, however, you are looking for a maturity benefit, you can opt for Return of Premium (ROP) plans. These plans are term plans which refund the premiums paid on maturity. Thus, a term insurance plan is not a waste of money. The coverage it provides is worth the premiums paid and if maturity benefit is what you want, choose ROP plans.
Myth – I am covered under a group plan sponsored by my employer. So, a term plan is not required
Fact –If your employer sponsors a group term insurance cover, great. You can buy a separate term insurance plan and enhance your coverage. But if you think buying a separate plan is a waste, think again. Your group insurance cover would be valid till you are working with your employer. Can you guarantee lifelong employment with the same employer? Certainly NOT! Everyone wants a change in their career to grow financially. Moreover, your group cover might not provide you a sufficient level of coverage. Thus, you should opt for a term insurance plan to have a sufficient level of coverage for a longer tenure.
Myth –Buying a term plan online is risky
Fact – It is not. The online medium allows you to buy a term insurance plan easily. You can compare the available term insurance plans online and select the one which is best for you. Moreover, the online medium also helps you buy the plan at the cheapest rate of premiums. The premium payment is made through a secured gateway and the policy is issued easily and instantly. Thus, buying a term plan online is the best bet.
Myth – I can calculate the coverage based on my income only
Fact – Calculation of the optimum level of the sum assured is a technical aspect. There are various ways to calculate the optimal sum assured level and the income method is one such method. The various ways to compute the optimal level of Sum Assured includes the human life value method, income replacement method, multiple of annual income method and the fact finding method.
Myth – I will have to choose the highest sum assured
Fact –Lot of people think that it is necessary to buy a term plan with a maximum cover. But, this is definitely not true. A term plan can be bought till the age of your retirement since most of your financial liabilities like car loan, home loan etc. are paid-off by then.
Myth –I can’t increase the policy cover
Fact – Who said you can’t? You can, certainly! For instance, if you buy a term plan at an age of 25 and draw a fat salary at an age of 40, you can certainly opt for a plan with a higher coverage as per your requirement.
How many myths are you a victim too?
So, as you saw there are so many myths associated with a term insurance plan. If you too believe in these myths get yourself enlightened with the actual facts. Open your eyes to the benefits of a term insurance plan and buy one online as per your requirement. Choose the sum assured wisely and don’t avoid a term plan if you are young, healthy or already have a group insurance cover.
Stop believing in such myths and educate yourself to the reality!