LIFE INSURANCE: MYTHS AND FACTS

 

Life Insurance

Life insurance is a topic that, for a variety of reasons, does not receive enough discussion. As a result, we shall attempt to dispel several myths about life insurance throughout the course of time. Life insurance can be tricky to figure out with all its technicalities and rules.

Misconceptions surrounding life insurance products discourage people from considering them as one of the most crucial instruments of financial planning. However, life insurance is one of the most essential financial contingency plans that protects your loved ones and secures their future even when you are not around. It helps as a source of savings and an add-on during shortages of funds. It may also serve as a source of income after retirement or in the event that illnesses or accidents impair your ability to work. However, there are so many common myths surrounding life insurance that people believe them without knowing the facts. So, let us break those myths and get a comprehensive understanding of the benefits of life insurance.

Myth 1: Life insurance is only for tax savings

Facts

Tax deductions is not the only advantage of life insurance. Life insurance has additional benefits in addition to the Section 80C tax reduction. It helps in providing the payout from your life insurance in case of your death, which will help in covering the monetary needs of those who are dependent on you. The maturity benefits from your insurance product can act as a corpus to achieve all your future financial goals.

Myth 2: Life insurance is very costly

Facts

Far from the truth than that can be. Insurance policies today offer extensive coverage at reasonable prices. If you do proper research with the help of an expert, you can easily find life insurance policies that fit into your investment budget and serve your purpose. An impressive life insurance policy can be obtained with even a small yearly payment, enabling your nominees to take care of their needs even in your absence. You can start with a lower sum assured and then build up additional coverage as your income increases. You can also opt for a term life plan. Term insurance typically provides a large sum assured for a low premium.

Myth 3: It is too early to think of life insurance. Young and healthy people do not need life insurance

Facts

Life is full of uncertainties. There are already too many instances of young individuals passing away and leaving their families on their own in the absence of a life insurance policy. As they often say, death keeps no calendar, and it makes a lot of sense to plan early.

Accidents can take a toll on your life, even if you are a young person at the peak of your health. In the early stages of your career, you do not have the chance to accumulate a large corpus through savings alone. However, life insurance makes sure that your family will not be shortchanged financially.

Furthermore, young people are required to pay a smaller premium than they would when they are older. The best time to buy life insurance is at a younger age, when you start earning. This way, you can get substantial coverage at a lower cost. You can easily select a plan that fits your income bracket and age because there are so many different life insurance policies to pick from. In turn, you can also achieve various investment goals with your life insurance policies.

Myth 4: Life insurance will be useful only after the policyholder’s death

Facts

In addition to giving your loved ones a financial safety net, life insurance plans can be helpful in other scenarios, depending on the type of plan chosen and its specific features. Retirement plans help you enjoy financial independence in the later years of your life. Term insurance plans with critical illness riders help meet the exorbitant expenses of medical treatments. Endowment plans can also be used as instruments for accumulating assets. A timely purchase of the ideal life insurance coverage will benefit not only your nominee but also you.

Myth 5: Singles do not need life insurance

Facts

Even if you are single, it is likely that you will get older and require enough money to pay off any debts you may have as well as any medical or funeral expenses. Retirement and income loss only make those issues worse. All these expenses could easily become more than just a pain in the absence of such a life insurance policy.                                                                                                                               

Myth 6: Group insurance plans from the employer is sufficient

Facts

In some cases, they might be. For one, these plans are valid only until you remain in their service. It may be terminated once you change jobs or retire. Moreover, the life insurance that your employer offers may not be sufficient for your family’s future needs.

A personal life insurance policy is also advised if you have a spouse who is a parent or if you have a lot of debt that your spouse and other dependents might need to pay off. It is recommended to have a life insurance policy worth at least ten times your annual income. You must also factor in inflation. Consequently, investing in an insurance policy privately can prove much more advantageous in the long run.

 Conclusion

It is very important to assess your family’s financial needs and goals carefully and conduct proper research for the right insurance policies that suit your and your family’s needs. Avoid believing these myths. Remember that regardless of your age or savings, you should always choose to safeguard your family with life insurance.

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