A significant part of any financial planning is the preparation for contingencies such as death and hospitalization. Buying a term insurance policy gives money on his or her death to the dependants.
There are, however, a variety of term insurance policy myths that should be debunked first to ensure that one buys a sufficient life cover to protect their family. If the term insurance policy is one of those things that you keep discovering reasons to not look into? As it is easy to put the idea of buying a term insurance policy off because it is not a legal requirement, like in the case of car insurance.
Myth 1: Term Insurance Is Unnecessary
A term insurance policy shields your family from the risk of premature death. In case of your sudden death, the payout of term insurance policy takes care of your family’s living expenses.
Advice 1: Term insurance is a product that acts as a safety mechanism. It is more about providing dependents with financial security. Term policies that cover the risk of premature death are cheap and perfect for providing coverage of life.
Myth 2: Term Insurance Saves Tax Money
This is usually used as a selling practice by insurance associates. In all reality, tax-saving is one of several term insurance policy benefits.
The main benefit of a term insurance policy is to provide financial stability to the family in case of the policyholder’s untimely death. Many tax-saving tools such as mutual funds, tax-saving shares, and government bonds, post-office savings schemes, and the Public Provident Fund (PPF) can be used to save taxes.
Advice 2: It is imperative to pay the term insurance policy premium to meet the family’s full financial needs in the event of the policyholder’s death. The cover should be about 7-10 times the policyholder’s annual income.
Myth 3: Young People Don’t Need Term Insurance
This is a false belief. The common idea is that people die when they are old, which is right to a large extent. But it is certainly safer to have the risk of death protected than to have dependants financially bereft in case of untimely death.
Advice 3: It is wise to take advantage of the lower premium rates offered to the young. You may also find it challenging to buy a term insurance policy when you get older because of higher premium rates or rejection due to ill-health.
Myth 4: The Death Benefit Is Not Assured
Term insurance policy providers aren’t out to rip off anyone. There’s a need out there to shield families against financial loss caused by the untimely death of a family member. Term insurance policies help financially secure your loved ones when you are not there to take care of them.
Advice 4: As long as you honestly disclose everything about your lifestyle and needs on your life insurance application, and pay all your premiums on time, your term insurance policy provider will pay out the death benefit if and when the time comes.
Myth 5: Cannot Get Term Insurance Quotes For Spouse
You can not only get a quote on term insurance plans rates for your loved one, but you can also purchase a policy for them.
Advice 5: It’s normal to buy a term insurance policy for someone else as long as you have an insurable interest and their approval. It is common for spouses to buy mutual insurances. It is as simple as families buying life insurances for their kids.
Myth 6: No Need For A Term Insurance Policy If There Are Other Savings
If you are incredibly wealthy and your loved ones have access to plenty of liquid assets to take care of the family expenses after your death. In this case, you may not need a term insurance policy (although you may still want term insurance policy for tax purposes, in this case).
Advice 6:Upon your death, your loved ones may get impacted heavily by the financial burdens of running a family. Then you need a term insurance policy, even if you have other investment portfolios like retirement plans and savings account.
Get Insured and Live A Carefree Life
A term insurance policy goes a long way toward protecting your family’s financial security. Getting a term insurance plan is a simple and vital component of every financial plan. Now that we have debunked the various myths about investing in a term insurance policy, you can build yourself a sound investment portfolio.
Before you invest, make sure you check premiums for the different insurance plans available using online premium calculators from trusted insurers like Max Life Insurance. Using a premium calculator gives you an estimated figure, which helps compare different term insurance plans and lets you choose the best term insurance policy. While you are at it, also look for various add ons available with a term insurance policy. Add ons like critical illness cover, accidental death benefit act as another layer of safety. Start today by getting a quick quote and begin investing now!