Term Life Insurance: Myths Vs Reality

In the event of a horrible tragedy, a term life insurance policy is believed as the most excellent method to safeguard your family's financial security. However, many people are hesitant to get a plan due to a variety of misconceptions and inaccurate information they've heard from friends, relatives, and acquaintances. The following essay will debunk some common myths about term life insurance policies and give facts to assist you in obtaining a better understanding of the various features of a term life insurance plan and make an informed financial decision.

Term Life Insurance: Myths Vs. Reality

Here are some typical term life insurance myths and realities that everyone should be aware of.

1. Myth - Young and healthy people do not have to buy a term life insurance policy.

Reality - There are various reasons why young individuals should purchase term insurance. Borrowing loans is one of the reasons to seek term insurance. Life insurance also protects your loved ones from your debts. Another reason is that term plans provide more coverage. The first few years on the job market aren't always the most lucrative. This is why an insurance plan that provides you with more coverage for a lower price is an opportunity not to be traded away.

2. Myth - A term insurance policy only offers lump-sum payouts.

Reality - Contrary to popular opinion, a term plan allows you to choose from a variety of payout possibilities. You can pick between a lump sum, lump sum with monthly income, monthly income for a defined duration, or monthly income till the end of the policy term payment options, depending on your family's financial circumstances.

3. Myth - A term insurance plan is inflexible. 

Reality - Insurers in India have made term insurance entirely flexible with convertible plans. You have the option of converting your term plan into another sort of insurance, such as an endowment, or increasing your term plan coverage on an annual basis.

4. Myth - A term insurance plan is a pure life insurance plan.

Reality - Term insurance products are no longer simply for your dependents' protection. You can supplement your term insurance with riders such as critical illness or disability insurance to cover additional unforeseen occurrences.

5. Myth - No term insurance policy offers maturity benefits. 

Reality - This myth is completely false. After the policy matures and the life assured survives the policy tenure, the TROP plan (Return of Premium) pays out the claims. There is no interest paid on the premiums, and the policyholder receives simply the whole amount of the premium paid.

6. Myth - A level term life insurance policy is not worth purchasing.

Reality -  Level term insurance is a type of traditional term life insurance in which your beneficiaries receive financial help only if you die. Many consumers are turned off by level term insurance since it does not payout once the policy matures and does not include any riders to cover medical expenses. They ignore a crucial benefit of level term insurance: it provides excellent coverage at reasonable costs. It not only provides you with more coverage, but it also covers the expenditures of your dependents.

Take Away

The above information dispels several common myths about term life insurance coverage. As a result, you must not be misled and miss out on the opportunity to provide financial security to your family, which will help them get through difficult times after your death.

You may also like to read:-

• What is the Right Time and Right Way to Purchase a Term Insurance Policy?
• How Can You Get Cheap Premiums?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.