Getting the right term insurance is one of the best ways to protect you and your near and dear ones from life's uncertainties. It is the most cost-effective way to secure one's life. While the premiums on term insurance are relatively low, the sum assured is higher, sometimes up to Rs 1 crore. However, many people are still unwilling to invest in a term insurance plan and are wary of such plans due to myths associated with a term plan.
Here are the five common myths linked with term insurance plans:
Term Insurance Is Expensive: This myth has been debunked time and again. "Term insurance provides a high amount of coverage at affordable premiums. However, the premium amount depends on many factors, such as the insured person's age, policy term, sum assured, premium payment term, and other additional benefits added to the term plan," says Rakesh Goyal, director of Probus Insurance Broker.
Term Insurance Doesn't Offer Any Benefits: Another myth surrounding term insurance is that it doesn't offer any benefits apart from death benefit coverage. With a term insurance plan, you could get optional coverage for critical illnesses or accidental death. In addition, you are covered for a long duration while the premiums are affordable.
Only Older People Need Term Insurance: "This is not true. Anyone with dependents who wants to ensure their financial security in the event of their untimely death needs term insurance. Term insurance is basically for every earning member of the family," says Anant Ladha, founder of Invest Aaj For Kal, a financial planning firm.
You Should Take Term Insurance Till 100 Years Of Age: Absolutely not. The purpose of term insurance is to secure your dependents. It means that you need term insurance until your family depends on you for financial needs. Typically term insurance should be taken till the age of 65 or a max of 75 years.
You Don't Need Term Insurance If You Have Life Insurance From Your Employer: Many people believe that the life insurance their employer provides is sufficient and they don't need additional coverage. "However, it's important to have your term policy, too, as it covers the premature death of the policyholder within the tenure specified in the policy document."
Hence, whenever you buy a term insurance plan, you must compare all available policies first and then buy the one that suits you best. Remember not to get influenced by any of the mentioned myths about term insurance plans.