Last Updated on 21/02/2019 by Deepak Singla
It is always a brilliant decision to purchase a life insurance policy for yourself. One of the biggest advantages of purchasing a life insurance policy is that it provides you cover and ensures that the future of your loved ones is safe and secure. However, one of the problems that the life insurance sector in general faces is the misconception that it does more harm to people than good. It is important that people are educated regarding the importance of life insurance in their lives and efforts are taken to bust the myths related to it.
Some of the myths related to life insurance that you will come across are:
Life insurance is meant for older people:
One of the misconceptions among young people is that they believe that life insurance is meant only for people who are old. It is a myth and young people must understand that it is always a good decision to purchase insurance when one is young as not only insurance plans will come cheap, but it will be more affordable for them to pay the premiums and enjoy the benefits for a longer period of time. Young people tend to take a lot of financial decisions and hence they need to understand that if something happens to them, it will be their family who will face financial problems. Hence, a life insurance policy ensures that all those financial liabilities are taken care of in case the policyholder is no more around in the future.
Single people should not purchase insurance:
One of the myths that people believe in is that if they are unmarried, they do not need insurance. It is important to understand that purchasing insurance when you are single will yield greater results in the future. For example, if an individual invests in a retirement plan today, they will be in a better position as they would have created a corpus which would be enough to take care of your family’s needs in future. Hence, one should purchase a suitable life insurance policy as soon as possible.
Group insurance is adequate:
You may feel that the insurance policy offered by your employer will suffice for you, which is one of the most regrettable decisions you may take. It is important to understand that group insurance is helpful only till the time you are working. Once you leave your place of work or take a retirement, you are no more covered. Apart from that, group insurance plans are not customisable and the cover amount may not be enough for you. Hence, it is important that you purchase a suitable private insurance plan for yourself.
Term insurance is not good:
You will come across people who do not have a positive viewing of term insurance for a very simple reason that this type of insurance policy does not provide any benefits in case the policyholder survives the policy term. It is important to understand that term insurance is the purest form of insurance that you can purchase for yourself. It is even more important to understand that the primary job of insurance is to provide you a cover and it should not be viewed as an investment tool. Term insurance is cheap and affordable in nature and gives you the option to opt for a large cover amount. Lack of knowledge is another problem as not many people are aware of riders where the premiums are returned if the policyholder survives the policy term.
Life insurance is meant only for the breadwinner of the family:
One of the biggest myths is people believing that only the breadwinner is supposed to have a life insurance policy. No, if you are an individual who is earning and has financial liabilities to take care of, then it is recommended that you purchase a suitable life insurance policy for yourself. It is also important to understand that you should not purchase the same life insurance policy as used by the main breadwinner in your house. You must sit and properly research and compare various insurance plans based on your future needs and accordingly purchase a life insurance policy for yourself. In short, your work profile may lead to changes in your insurance needs but it never eliminates them.
No loan, no insurance:
Life insurance policy is a must if you have got financial liabilities to take care of as your policy will ensure that your immediate financial liabilities are taken care of in case something happens to you. Thus, this may lead you to think that in case you have not taken any loan or do not have any financial liabilities to take care of, you do not need life insurance. It is important to understand that regardless of whether you have made investments or not, life can be unpredictable and hence you must purchase a life insurance policy so as to ensure that in case something happens to you, the future of your loved ones is safe and secure.
Health insurance is enough:
While it is a very good decision to purchase a health insurance policy keeping in mind the medical inflation, believing that health insurance is enough and you do not need life insurance is not a very good decision. While your health insurance policy will take care of your medical expenditure, having a life insurance policy provides more help from a financial point of view. Hence, it is always a good decision to have both health and life insurance policies.
Life insurance is a tax saving tool:
One of the biggest mistakes that you can make in general is to view life insurance as tax saving tools. It is true that you can save on taxes if you have purchased a life insurance policy. However, to simply view it as a tax saving tool is a financial blunder. Generally, people in their bid to save on taxes purchase any random insurance policy which tends to do more harm to them than good. Hence, never ever purchase just about any insurance policy only because you want to save on taxes. Do your research and compare and then ultimately decide on that one insurance plan which you feel will be suitable for you. As far as taxes are concerned, you are bound to save on them.
Hence, these are some of the myths that people come across and tend to believe them as well. It is important that you take conscious effort to educate yourself about what your life insurance policy can offer you so that you can successfully debunk these theories. It is always advisable that you properly research about the insurance plans you are looking to purchase for yourself. In case you have any doubt or queries, you must always get in touch with a financial advisor so that you have a better knowledge of life insurance and you do not make mistakes which can come back to bite you later.