Common Myths on Buying Term Insurance Busted
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Term insurance is designed to provide a huge amount of money to your family in case of your death during the policy term. The sum assured amount given to your loved ones can be used by them to pay rent, grocery bills, kid’s school fees, lifestyle expenses, higher education, marriage cost, etc. Term insurance is considered an economical and long-term solution to insure your family from any type of financial crunch in your absence. However, many misconceptions prevail in the market about this insurance product which impacts the decisions of many people in relation to buying term insurance. Therefore, let’s find out some myths about term insurance and their truths.
Myth 1: Term insurance should be bought as early as possible.
Purchasing a term insurance policy early in life is commonly recommended to help you save more money. Actually, the savings here is attributed to a lower amount of premium which you could have to pay at a young and healthy age and remain fixed for the complete policy term. It leads to many individuals buying term insurance plans at a young age without having any financial dependents. The product is to support your family in your absence, so if you have no financial dependents or plan to have them soon, there is no hurry to purchase this plan and you can plan it accordingly.
Myth 2: Term insurance cover should be 20 times your annual salary.
To purchase a term insurance policy of twenty times your annual salary is recommended as a thumb rule to find an ideal cover. But, the reality is that term insurance cover could vary from individual to individual as everyone has a different family, plans, needs, and so on. Therefore, you should not fall for such thumb rules and must do a calculation to get the accurate amount that will be sufficient for your family based on factors such as requirements of your family, bills and expenses, loans and liabilities, etc.
Myth 3: Riders helps in saving money and time
Term insurance riders are add-on covers which offer additional coverage for special situations like accidental death, disability, critical illness, and so on. However, it may look that riders got your back by saving you from several sorts of trouble. But, riders are quite less comprehensive in comparison to detailed covers and do not offer several much-needed factors. Also, they are not way cheaper. In simple terms, the cost of different rider covers are close to their comprehensive covers, but they are available with several limitations. Thus, riders may not be a good option for everyone.
Myth 4: My family will get it quickly and easily.
It is not as easy as it looks. If you own some debts to pay during your death, your term insurance claim amount will be used to settle your loans first, even before your loved ones get to see it. But, if you have signed an addendum known as the Married Women’s Property (MWP) Act while buying the plan, then your cover amount is protected from your loans or liabilities and will be given directly to your wife. This facility is available only at the time of buying the plan and never later.
Myth 5: Hiding medical conditions can lower the premium
This notion is not just a myth, but dangerous too. If the insurance provider comes to know about your ailment or medical history anytime later, they can consider it as a case of fraudulent misrepresentation and can even cancel your policy right away. Also, the insurer can deny providing the claim amount to your family after your demise. Hence, you must provide the right and exact details on the policy proposal form. If you have any existing condition, which can increase your premium, you should accept it and pay the amount to ensure your family gets the claim amount without any hassle.
Conclusion
If you are planning to buy a term insurance policy, go through the aforementioned points to save yourself from falling for any of the misconceptions. We hope these myth busters will help you make informed decisions and find a perfect term insurance plan.
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