There are several misconceptions around life insurance products that dissuade people from considering them for their investment planning. However, life insurance is one of the most important contingency plans that protects you and your loved ones against uncertain life situations. It not only provides financial support after your untimely passing but also an steady income after your retirement.
That being said, here are some common misconceptions regarding life insurance that you need to avoid right now to understand the benefits of this crucial investment product.
Misconception 1: They are only meant for tax saving purposes
Tax deductions u/s 80C of the Income Tax Act allow you to save up to Rs. 1.5L per annum on your premium paid towards life insurance. However, there is so much more to it than tax saving. If something were to happen to you during the policy term, it is your life insurance that will give a handsome payout to the beneficiary that they can use to stay financially secure after losing their source of income. You can also choose a plan with maturity benefits that builds a corpus for you to meet your long-term financial goals.
Misconception 2: They are only useful after the policyholder’s death
Gone are the days when life insurance was only about hedging your death risk. Today it depends on what kind of insurance you have taken and features you have selected. Other than providing your loved ones with financial security, life insurance companies these days offer wide range of products that secure you at every life stage. From paying for your child’s education to securing your retirement, you can choose a plan based on your lifestyle needs and requirements.
Misconception 3: Healthy and young people don’t need to invest in life insurance
You may think that as a 20 something, life insurance is not one of your priorities, but you are wrong. Life is uncertain and accidents can happen at any time. Are you the only earning member in your family? What if something happens to you? Who will take care of your family’s needs?
If you are young and healthy, you have all the more reasons to invest in a life insurance product because you can enjoy maximum coverage for lower premium. You can check out the life insurance quotes offered by multiple insurers online and choose the one that offers you the highest benefit for the lowest price.
Misconception 4: Life insurance is only affordable for people who are financially sound
There are many insurance products today that offer you wide coverage at an affordable premium. These plans are known as term insurance. You can also research life insurance quotes online to see the ones that suit your needs and budget. You can start with a lower sum assured and then add on to it as your income and responsibility grows.
Misconception 5: Your insurer will deny you payout
One of the biggest concerns that life insurance investors have is fear of their claims being rejected. While this is a valid concern, you can eliminate that risk by checking the claim settlement ratio of your life insurance provider. Higher ratios indicate that the insurance provider is reliable and will most likely settle the claim, unless there are any discrepancies in your application.
You can check the IRDAI website to check the CSR value of most insurance providers. Just make sure you accurately declare all your medical conditions at the time of buying your life insurance policy. Doing so will prevent your nominee’s claim from being rejected later.
Misconception 6: Older people are not allowed to buy life insurance
Even though it is advised to buy your life insurance policy at a young age, many companies these days are also offering products that older people can buy. Life insurance plans with retirement component is designed to offer financial independence to older citizens, even if they no longer have an income. They have the option of depositing a large sum of money in their account to get annuity and start receiving pension immediately. Their spouse will continue receiving the pension even after their main policyholder’s demise. Senior citizens can also invest in whole life insurance products to get lifetime coverage. Their family members will receive death benefit upon your demise, ensuring that they always financial support to keep them secure.
Before you invest in a life insurance, it is important to assess your family’s financial needs accurately. You can then get online to research options that are most suitable to your requirements. Do not let these myths derail you from your investment plans. Life insurance is an important addition to your financial portfolio. So make sure you get one in a timely manner.