Life insurance is amongst the most trusted and highly recommended financial products when it comes to investment. In spite of being such a popular product, people hold several misconceptions about it. These myths often cloud the decision of individuals who wish to buy life insurance. In this article, let's look at the most common myths prevalent about life insurance and get a rationalized answer to why they don't really matter.
Life insurance is a waste of money –
Before considering this myth, ask yourself 'Would your family face a financial crunch in case you die an untimely death?' If the answer is yes, then life insurance is definitely not a waste of money. A life insurance is essentially bought to protect ourselves from the risk of untimely death. The policy takes care of the financial situation of your family in your absence. The policy is more like a safety mechanism to ensure your family has the required financial security. Moreover, term policies that offer cover for risk of untimely death are cheap and most ideal for providing life coverage.
This product is for saving taxes –
Tax saving is one of the benefits that life insurance offers. The main benefit you get with the policy is the guarantee of financial security in case of the death of the policy holder. You can avail tax saving with other financial products like mutual funds, tax-saving bonds and government bonds, post-office savings schemes etc.
Insurance is not for young people –
This is a completely wrong notion. It is true that people normally die when they are old, but it is important to secure your family in case of an eventuality. Also, getting the insurance at an early age will be a smart decision as you would get a longer cover at lower premium rates. Getting an insurance at an affordable cost may be difficult in the later stage of life as the risk of insuring life will be high. The insurer will demand higher premium rates or cover could be refused in case of ill-health.
I don't need to buy life insurance as my employer provides me with a life insurance –
The cover offered by the employers lasts only until you continue working with the company. Moreover, life insurance provided by employers is not adequate to help your family be financially secured in case of an eventuality. Also, when you take a policy personally you have more freedom in choosing the provider, the sum assured and the other facilities you want.
Policies recommended by relatives/ acquaintance is a trusted choice –
This may not always be true. Everyone has different requirements from their policy. Hence make sure to select a product with your own understanding. Also, avoid taking policies recommended by relatives/ friends just to maintain relations with them. Buy life insurance policy after understanding the sum insured offered, the benefits of the policy, the tenor of premium payment and the terms & conditions supporting the policy.
5 myths of life insurance debunked