Top 5 biggest life insurance myths
Latest Business News - There are several misconceptions about life insurance. It is a popular notion that older or married individuals with kids should invest in one, or that the insurance only offers post-death benefit. Here we debunk some of the biggest life insurance mythsâ€Ś Life insurance policy is critical to any financial planning. Yet it is never prioritized and is often considered complicated to decode. But it is always a good idea to invest in life insurance, more so sooner than later. Especially, since not having one when you need it can be devastating. While there are quite a few common myths about life insurance, here is a list of the five biggest ones.
Myth 1: Single, without dependents. I don't need coverage At the risk of sounding morbid, singles too need enough coverage to cover the costs of personal debts and medical bills. If uninsured, they could leave unpaid expenses for families to deal with. Even if single people are not saddled with such dire situations, it is a good way to leave a legacy to some cause. Also, many policies allow insurers to purchase additional coverage in the future. For example, HDFC Life offers Life Stage Protection â€“ under Life option where the insurer can increase the insurance cover on certain key milestones of life like marriage, child birth without
fresh medical test. So, the policy can be continued with changes if and when he or she decides to have a family.
Myth 2: Too young to think about coverage There is no such thing as too young for life insurance. If you earn a salary, you might as well have insurance. Several independent studies and the Insurance Regulatory and Development Authority of India (IRDAI) observe that the insurance sector is a colossal and growing at a speedy rate. However, although the awareness about life insurance is increasing, the Indian youth is still misinformed about the cost.
Myth 3: Only men need life insurance While many families are prompt in getting a life insurance policy for the male breadwinner, coverage for the working woman is rarely factored into the financial planning. Most don’t even bother to insure the homemaker as they don’t have financial earnings. What if something were to happen to the lady of the house? Besides the emotional repercussions, the harried head of the family may need to get help to take care of the kids. And that, even in a developing nation like India, can cost a lot of money. Besides, this coverage will also give the father a chance to take time off and help the family adjust to their loss.
Myth 4: Insurance is of no use unless you die It is critical to understand the type of life insurance that one needs to integrate in the financial plan. Term insurance is a life insurance product offered by an insurance company that offers financial coverage to the policyholder for a specific time period. Endowment plans, unit linked insurance plans (ULIPs), money back and more also cover life for limited term and post that if you survive the term – the plans provide returns unlike a term plan.
Myth 5: Better to invest the money rather than lock it up in life insurance of any kind Everyone, irrespective of their financial standing, needs life coverage. Solely depending on investments is not wise. It could mean that in case of an untimely death, the investor would leave very little provision for dependents. That would hit the family finances really hard after the depletion of assets. It is important to think of life insurance as a way out to help in continuing life as usual when something unusual happens, and not as an instrument where money would be locked in for a long period
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Published on Jan 13, 2017
Top 5 biggest life insurance myths on Business Standard. There are several misconceptions about life insurance. It is a popular notion that...