5 min read
Updated on Jul 13, 2022
There are plenty of life insurance myths that people have regarding and they need to be dispelled.
It is thanks to these wrong ideas that people fail to see insurance as what it truly is – a vital part of your financial planning. You need to understand that these policies are an important constituent of your financial contingency plan – one that would protect your near and dear ones financially in the future. It would make sure that they do not experience a shortage of funds when they need them in the future. In certain cases, it can also act as a source of income following retirement as well as ailments and accidents that render you unable to work and earn.
Myth 1 :It is a mistake to assume that you should buy term life insurance only to get tax benefits. Indeed you would get tax benefits from Section 80C of the Indian Income Tax Act, 1961 when you invest in these policies. However, that is not the only benefit that you get from them. The payout that your beneficiaries would receive in case of your death within the policy coverage period or any other such covered event would help them meet their financial needs in the future.
Myth 2 : It is not that a life insurance policy would be beneficial only after the death of the policyholder. A lot in this case depends on the type of insurance policy that you have chosen and the features that it has. These plans do offer your loved ones a financial safety net that helps them in your absence. However, these policies can be helpful in several other situations as well. For example, if you choose a retirement plan it would help you enjoy a sense of financial independence in the later stages of your life.
Myth 3 : It is not that the best life insurance policyis not meant for healthy and young people. There is no telling the number of uncertainties in life. An accident can bring your life to an untimely end even when you are in the pink of your health. Now, this is basically the early part of your career which means that you have not had much of a chance to create a corpus that is large enough to take care of the needs of people you love and care for in your absence. Savings are not going to hack it and that is for sure.
Myth 4 : People who know insurance factsknow that it is not as if only the wealthiest people can buy these policies. The insurers these days are offering good policies with detailed coverage and at good rates as well. All you have to do is some research and you would be able to find a customized plan that suits your need the best, and that too within your budget. In the initial stages, you can always start with a lower sum assured amount and then as your income goes up you can add to the same.
Myth 5 : One of the biggest insurance mythsis that your employer’s insurance is good enough for you. Please remember that even if the policy is a good one it would cover you only till the time that you are employed by the company. The moment you retire or change jobs, the coverage would cease to exist as well. Even more important than that is the fact that the life cover provided by your employer would never be sufficient to help your family deal with the needs that it may have in the future.
Myth 6 : When it comes to prominent life insurance myths and factsa lot of people tend to think that their payout would either be rejected by the insurer or taxed heavily by the income tax authorities of India. This is why you must always look at the CSR (claim settlement ratio) and the solvency ratio of the insurer before you decide to buy a policy from the same. The higher the ratio the better it is because that means your chances of getting the payout are higher as well. As far as taxation goes, your beneficiary would not have to pay any income tax on the payout if there is no extra interest in the same.
Myth 7 : Older people would not get such policies. This is one of the most pervading insurance myths. The truth is that many insurers are offering policies that can be bought even by older people. For example, you have retirement plans that offer senior citizens a degree of financial independence even when they stop receiving their salaries. They can invest a big sum in an immediate annuity plan and start getting a pension as well.
Myth 8 : Perhaps the biggest among the insurance mythsis that the process of getting these policies is filled with innumerable and insurmountable difficulties. Life has become so much simpler these days because of the phenomenon we all know as the internet, and this includes the activity of buying insurance as well. Now, no longer do you have to depend on agents to buy the policy or wait to get an appointment with an insurer. All you have to do is compare the policies online, choose one that you like the most, and then visit the website of your preferred insurer where you can buy the policy after completing a few formalities .
So, as you can see for yourself, there is no end to the number of insurance mythsthat people have here in India. However, you must assess the financial requirements of your family with care. After that, you need to look online so that you can find the policy that suits the needs of your loved ones in the best way possible. You already know the myths that we have talked about over here. It is better that you steer clear of them considering you now know what they truly are.
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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