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5 term insurance policy myths that can cost you very high

by jennikundu

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Insurance forms the number one choice for any individual looking out to save for the future of his family. In spite of the many lucrative benefits offered by the policy, there are many individuals who consider investing in a term insurance policy as waste. These people mostly form such an opinion by giving into the several myths that run around term insurance. Some of these myths are as follows –

No#1 – I don’t need a term insurance policy as I have no dependents –

True, saving for your dependants is an important task to do, but if you don’t have any dependents today, there may be possibilities you may have some tomorrow. Saving for tomorrow is the most sensible thing to do. There’s no use waiting to have a family and then beginning to save. Also, life being unpredictable, you never know your insurance amount can be of great help for your parents.

No#2 – My employer provides me with a life insurance, I don’t need to invest in one separately –

Many organisations offer their employees the benefit of a life cover, this works as an incentive to retain them. Employees feel that the cover provided by the policy is enough but what they ignore is that this policy is not portable. This means that if the employee resigns from his services in the company the policy will cease to provide cover. Also, the coverage provided by a group insurance is inadequate. With uncertain economic times depending on such a low cover is not a wise decision.

No#3 – I am too young to invest in a term insurance policy –

Individuals are mostly of the opinion that term insurance policy is not for the young; this in fact is a dangerous belief they hold. It is best to invest in a term plan when you are young. The main benefit of doing so is that you will be charged low premium as the risk of covering your life is less plus you get a longer cover for a good sum assured and at a lesser cost.

No#4 – A term insurance plan is essentially for those who seek tax saving –

Sure tax saving is a benefit that term insurance policy provides, but that alone is not why many invest in this policy. The major benefit provided by the policy is financial support in case of the untimely death of the insured. Tax savings schemes are plenty in the market like mutual funds, tax-saving bonds and government bonds, post-office savings schemes etc. But investing in a term plan to just avail tax benefits is not a sensible thing to do.

No#5 – A term insurance policy is expensive to invest in –

Many feel that the premium amount charged by a term plan is expensive as compare to the other investment plans in the market. Today, however, you can avail discounts on the term insurance policies in case you avail the policy online. This is a means of encouraging users to buy the policy online. Also, non-smokers are awarded with a special premium cost that is lesser than the normal cost of the plan.

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