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Breaking The Myths of Term Insurance Plan

by Rosy

When it comes to buying a term life insurance policy, people have many misconceptions about it. It is mostly viewed as an investment or as a tax-saving instrument. Let us look at some of the common myths that people have about term insurance and the truth behind it.

Myth 1

Term insurance does not provide maturity benefit hence it is waste of money

Reality

Many people avoid buying a term insurance plan mainly because it does not provide any lump sum amount upon maturity like other life insurance products. However, this does not essentially mean a term insurance plan is useless.

Think about what will happen to your family if you meet with an untimely death. The term insurance pay out can help them meet their everyday expenses and maintain their regular lifestyle. If you purchased the right coverage, you can be assured that your family never faces any financial difficulty even in your absence.

Myth 2

Term insurance is expensive

Reality

One of the most misconceptions people have about term insurance is that it is more expensive than other life insurance policies. However, nothing can be more untrue. Term insurance is the most inexpensive type of life insurance.

It has the lowest premium compared to other life insurance products. This is mainly because it is a pure protection plan and does not have any investment or savings component. You can purchase a term plan with high coverage up to Rs. 1 crore at an affordable premium starting from less than Rs. 15 per day.

Myth 3

Term insurance claims are often rejected

Reality

All insurance companies have specific guidelines for claim settlement. And, if you adhere to the claim filing rules and comply with the documents, you can be sure that your claim gets approved. It is best advised to know about the claim rules first before applying. This will significantly reduce your chances of rejection. Also, you can consult the insurance representative to guide you through the process.

Statistically speaking, according to the IRDA’s annual report the average term insurance claim settlement ratio of insurance companies in India ranges between 85 – 99%. This means the chances of claim rejection is minimal.

Myth 4

All term insurance plans are the same, customisation is not possible

Reality

Just like any other life insurance policy, a term insurance plan is fully customisable as per your needs. You have the flexibility to choose the sum assured amount, policy duration, pay out option and add riders to your standard plan to extend the coverage scope.

Assess your insurance needs first and you can customise the term plan accordingly.

Myth 5

I am covered under the group insurance, I don’t need another term plan

Reality

If your employer has offered you a life cover for you and your family, great! But remember a group insurance policy often has limited coverage and benefits. Also, you can avail of the policy benefits only until you are employed with the organisation.

If you quit your job or move to a different company, you don’t get the coverage. This means you may not have any insurance protection at all. And if something happens to you during this period, your family may struggle financially, especially if you are the breadwinner.

To avoid such a situation and give your family comprehensive protection it is better to buy a term plan even if you are covered under a group insurance.

Final Word

When you buy term insurance, do your research well about it and ignore all the misconceptions around it. Purchase a term insurance online today and secure your family’s financial future.