Most people find life insurance as a boring topic, as a result, it is not discussed enough by people and leaves them vulnerable to financial ruin should unforeseen events occur. This leads to people being influenced by myths and misconceptions. These myths result in procrastination while deciding on buying the most important financial protection of our life. Let’s look at the common myths associated with life insurance.
Let’s look at a few of the common myths and misconception surrounding life insurance and outline the truth:
Myth: If You are Young You Don’t Need Life Insurance
Life is simply unpredictable. Unforeseen and unfortunate events can occur without any warning or indication. There are plenty of examples of premature and untimely deaths around us. It is not uncommon to hear about people meeting with accidents that lead to death at a relatively young age or leaving a family in financial ruin due to the absence of a life insurance policy. This makes it vital to plan and commit to a life insurance policy early on in life to ensure that you and your family will not face financial ruin should the worse happen to you.
Myth: I Have Employer Life Insurance, So I Have Sufficient Coverage
A job that provides employer life insurance is certainly a great perk to have. However, the coverage provided by such policies is generally very basic and low. It might not be enough to actually cover any medical needs and will be terminated should you leave your job. The best solution is to not rely completely on employer life insurance and opt for a simple and cost-effective plan like term life insurance to supplement it.
Myth: Life Insurance Plans Are Only Useful To Others After I Die And Is of No Use To Me
One of the biggest misconceptions about life insurance is that it only offers a death benefit. Different life insurance plans address different risks of the policyholder and provide different benefits. If your aim is to ensure financial protection then you can opt for a term plan, if you want to create savings then consider choosing an endowment plan or select ULIPs for investment needs and retirement plans to create funds for your life after retirement. Life insurance policies vary from each other distinctively and don’t limit themselves to just a single benefit but rather, can be used to provide multiple benefits based on your goals and objectives.
Myth: Life Insurance is Expensive
Another popular misconception. Nowadays, it takes very little effort to conduct research online to find an insurance policy that offers massive financial returns on a relatively low investment. Term insurance plans are great examples of this as the premiums owed are generally very low but the payout is incredibly high, ensuring that your family and dependents are financially secure in your absence. Also, there are several other life insurance plans which offer low premiums and can be modified to suit your needs and requirements.
Myth: Single People Don’t Need Life Insurance
You might be single currently and might plan to stay that way but growing old increases the chances of contracting medical illnesses or diseases which would require a large sum to pay for medical expenses as well as memorial service costs. Retirement or loss of income as a result of a critical illness might leave you helpless and dependent on others. An appropriate life insurance plan with a proper sum assured amount will allow you to be independent even during harsh and tough times.
Myth: There Is The Hassle Of Finding An Insurance Agent and It Involves A Lot Of Paperwork
The advent of the internet has worked wonders for the life insurance sector. It has enabled people to compare and look for different insurance plans using laptops or even smartphones and purchase the policy by paying through an online portal. Purchasing a life insurance policy online means that there is very little to no paperwork to handle. This translates to a convenient and quick process of purchasing a life insurance policy.
Myth: I Bought a Life Insurance Policy Long Back, I Am Safe and Covered
The only constant in life changes. The world around us changes every day. This might lead to the sum assured amount chosen by you years ago no longer be sufficient for covering you and your family’s needs anymore. Considering the rising cost of inflation and growing responsibilities, you need to ensure that your sum assured amount is at least 20 times more than your annual income. Also, it is wise to review your life insurance portfolio regularly and ensure that your coverage amount is sufficient enough to match your current lifestyle.
Life insurance is a very important decision in life and hence it is crucial to not let our opinions regarding it be influenced by myths and misconceptions. Decisions about purchasing life insurance must always be based on careful research and factual information. Now that these common misconceptions are cleared up, it might be time to look at which life insurance policy is ideal for you.