Term insurance is often the base of financial planning for anyone who wants to secure their family’s future. Understanding the value of something is, however, sometimes a misconception. For example, many myths surround this thing which blocks opinions and minds, making them completely refrain from or judge term insurance.
1. Expensive Term Insurance
Term Insurance mostly is the strongest misconception held by individuals about life insurance policies. Most people think that the term insurance policy under this category is expensive. Comparatively, this will put term insurance worth less as it does not hold any investment features when compared to life insurance products like whole life or endowment. Term insurance is one of the cheapest yet best ways to secure the future of one’s family.
For example, term insurance with a cover of 2 crore will cost hardly anything compared to the other types of insurance. The trick to affordability lies in buying it young and healthy. Many providers now offer plans with variable premiums and cover to suit the budget.
2. Term Insurance is Only for Young People
Another misconception is that the term insurance only applies to a young person with dependents or serious financial obligations. Of course, buying a term insurance policy when younger does present a cheaper premium. However, the fact of the matter is that term insurance can be extremely useful at every age. Life itself tends to become increasingly burdensome with time, not less.
The term insurance plan is not limited to young individuals. Most of the insurers will provide a coverage plan that ranges up to the age of 70 or beyond, based on the policyholder’s requirement. Therefore, with or without the age factor, a term insurance plan is a crucial backup for financial security for your loved ones.
3. No Income Generation through Term Insurance
Most people believe that term insurance does not offer any return. This is because term insurance is a pure risk cover which does not generate any cash value unlike whole-life or endowment policies.
Moreover, while the traditional term insurance does not have a return on the investment, presently, most of the insurance companies offer riders. For instance, the Return of Premium (ROP) rider is such that at the end of the policy term, if the policyholder survives the coverage period, he gets back the amount paid as premiums. This cost element along with a chance of return attracts more people towards term insurance.
4. A Term Insurance Policy is Really a Complex Thing Put Up by Hurdles
Most people would think that it’s the complexity of the policy, which scares many of them away. Most believe that only professionals will be able to discern that jargon and all the legal phrases attached to policy terms and conditions. Term insurance, however, is possibly one of the easiest types of life insurance.
A term insurance policy is nothing more than an agreement between the insurer and the policyholder. The policyholder pays premiums regularly, and in return for the policy, in the event of the policyholder’s death while the policy is still in effect, the insurer pays the beneficiary a death benefit. There are no especially complicated clauses or an investment component involved.
5. Insufficient Coverage in Term Insurance
One of the most general myths is that the benefits of term insurance plans don’t match the requirements of the policyholder. This fact is that term insurance coverage is now flexible and can be customized to what you need. It may be as little as the most minimal coverage for family protection or as much as a large sum for dependents.
For example, if you want a higher sum assured then you can go for the best term insurance policy of over 2 crores for it. The required terms of coverage will be identified according to your financial condition, loans, income, lifestyle, and future liabilities.
6. The Term Insurance Should be Covered by Only the Primary Earner
The most popular myth is that only the head of the household should have term insurance. It is very important that the primary bread earner has the right coverage, but the other family members, especially the stay-at-home spouses and parents, must also be considered for term insurance. In the event of the stay-at-home spouse’s sudden death, the surviving partner would suffer the economic burden of raising the children, doing household chores, and the emotional shock of losing a partner.
Comprehensive life planning ensures the security of all family members, regardless of their position in the family. This is very crucial for families with dependents or high liabilities.
7. Term Insurance Offers No Flexibility
Another myth is that once you’ve purchased a term insurance policy, it’s set in stone. However, term insurance offers a surprising amount of flexibility. Many insurers provide options to adjust the coverage, pay premiums in different ways, or even convert a term policy to a permanent one if your circumstances change.
For instance, in case of an increase in liabilities or more members in your family, you can increase the coverage. Similarly, in case your liabilities decrease, you can decrease your coverage and accordingly, the premium that you would pay to the company would also decrease. It’s a flexible form of life insurance suitable for every phase of life.
8. Term Insurance has no Certain Claim Settlement
In any case, others fear that once they die, their beneficiary will not be getting the pay if something goes wrong with them. But it’s far from reality. For this reason, a term life policy guarantees its insured death benefit only if premium payment is completed before the time of death.
There are, however, specific exclusions in the case of policies with exclusions that relate to suicide during the first two years from when the policy was written. The idea behind term insurance usually goes by the effect that its fine print doesn’t come as complicated about what’s included or not, since, basically, the life will be paid the benefit for natural and accidental death; if such be the cause.
Conclusion
Term insurance is one of the best available financial security devices for anyone to own. An inexpensive, common-sense mechanism to protect a loved one could be yours. A few pages herein will dispel some of this common myth, as you’ll appreciate the real deal in term insurance.
Be you a newcomer in your professional career or advanced in life, the time never really comes for choosing the benefits of the best term insurance plan for 2 crores or simply one that will help you budget effectively. This will depend upon carefully assessing the need, asking around, and finally choosing one that will keep your mind as well as your family’s mind at peace.
