The government of India provides data which shows that 75% of Indians are not covered by any kind of life insurance. This can be due to the various myths known to the general population about purchasing an insurance policy. With many viewing it as a tax-saving instrument and others believing that insurance provided by their employer is sufficient, this can be the start of being misinformed. So, let’s debunk some of the life insurance myths today.
Myth 1: Insurance Policy Is Only for Tax-saving
Though a life insurance policy does give tax benefits, you should not purchase it only for the sake of reducing your taxable income. The reason why you should consider getting a term plan is to secure your loved ones with a financial backup. But when you invest only to save up on taxes, you do not look at it as a tool to protect your family. Insurance policies provide you with a life cover in case something were to happen to you, giving a tax-free lump sum payout to the beneficiary.
Myth 2: Insurance Plans Give Benefits Only on Death
The goal of an insurance plan is to safeguard your loved ones, but that is not the only benefit. You can also fulfil long-term wealth creation goals by getting a plan that pays out maturity benefit. Policies like endowment policy, money-back plan, whole life insurance, etc. enable you to save up money. This way if you survive the tenure of the policy, you will get the lump sum maturity benefit.
Myth 3: Homemakers Don’t Require a Cover
Not only do the earning members of the family require a cover, but also the homemakers need to have insurance. Though stay-at-home parents do housework like cooking, cleaning, and taking care of the kids, it can be tough to replace in case something happened to them. You would need a full-time person to do everything around the house, which doesn’t come cheap. Thus, even a homemaker needs an insurance cover.
Myth 4: Insurance Plan Provided by the Employer Is Sufficient
Life insurance policy given by your employer will provide your family with a low amount which will not be enough to make ends meet. And you are covered only for the time you are a part of the organization. So what if you lose the job or switch to another company that provides no insurance? When you get an individual term plan online, you can customize the sum assured, policy term, premium price, insurance riders, etc. based on your family’s needs.
Myth 5: If You Are Young and Healthy, You Don’t Need a Cover
Insurance plans can be bought if you are healthy and young as the sole goal of getting one is to protect your family. Being fit and young is also the best time to get a life insurance policy as you get a cheaper premium. But as time passes, you will need financial security which is why your current lifestyle should not be the indicator to measure the need for a term plan.