Myths about Life Insurance policy
Misconceptions regarding life insurance products dissuade people from considering insurance policy as a vital instrument at the time of doing financial planning. It is a must to understand that taking a financial contingency plan is the best way to protect your loved ones against any kind of fund shortage in the future.
It is not only making you medically secure but also works as a source of earnings after retirement or if any kind of accident or ailment leaves an impact on your income during the term of your insurance policy. To avail of the benefit of a life insurance plan, it is important to have a better understanding of the plan by clearing all the myths in your mind related to buying a life insurance plan.
Myth 1
Life insurance is only a tax-saving plan
Tax deduction under Section 80 C is not the only benefit that one can avail of after buying a life insurance plan. In case of your absence, this life insurance plan will also fulfil the monetary needs of those who are dependent on you. The maturity benefits from your insurance product can act as a corpus for many future financial goals.
Myth 2
You can make use of a life insurance policy only after the policyholder’s death
Based on the kind of life insurance plan selected by you and the specified features, except providing financial safety to your loved ones, a life insurance plan can be useful in other situations as well. The retirement plan is also a part of the insurance plans which helps you in enjoying financial independence in the later years of life. Another is term insurance plans which cover critical illness riders to help meet the exorbitant expenses of medical treatments. You can also choose endowment plans as asset-building tools. Not only your nominee, but you also can profit from a timely investment in the right life insurance product.
Myth 3
Life insurance plan is not a requirement of young and healthy
Another name of life is uncertainty. Accidents can take place in any phase of your life, even it can happen in the life of a young person who is at the peak of health. In your starting phase of career, you do not get an opportunity to accumulate a large corpus through saving alone.
But life insurance ensures your family does not face a lack of funds even in your absence. At an early age, a person must bear a lower cost of a premium in comparison to the older age. 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.
Myth 4
Only financially strong people can afford life insurance
Nowadays insurance policies are offering extensive coverage at reasonable prices. To get a reasonable policy that matches according to your pocket, extensive research is to be done for the same.
You can choose a lower sum assured in the starting 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 5
Insurance cover done by the employer is sufficient
Insurance cover given by an employee is available till the time you are working for the organization. In case you make a job change or retire, your policy may lapse. Apart from that, the life-cover that your employer offers is not enough for your family’s future needs. It is recommended to have a life insurance cover of at least ten times your annual income. To invest in an insurance policy privately can prove much more advantageous in the long run.
Myth 6
Either you will be denied for payout or will be taxed
Insurance cover given by an employee is available till the time you are working for the organization. In case you make a job change or retire, your policy may lapse. Apart from that, the life-cover that your employer offers is not enough for your family’s future needs. It is recommended to have a life insurance cover of at least ten times your annual income. To invest in an insurance policy privately can prove much more advantageous in the long run.
According to the 1961 Income Tax Act, death benefits from life insurance products are not taxable if the beneficiary receives no added interest on the payout.
Myth 7
Life insurance is not for older people
Many companies offer plans which are suitable even for older people. It is also known as retirement plans that provide financial independence to the senior at their retirement age. To avail of the benefit, they can deposit a lump sum amount into an immediate annuity plan and start getting their pension immediately.
According to this plan, their spouse can continue receiving the pension after their demise. Senior citizens can also buy whole life insurance plans and get coverage for their entire life. Their loved ones will receive death benefits when they are not around.
Myth 8
Choosing the right life insurance plan is troublesome
Due to the presence of the internet, the complex process of buying life insurance has now become a simplified one. You can now easily make insurance comparisons by visiting the web portal of the insurance provider. After that, you can calculate the premium that you are paying using an online calculator. After clearing all your doubts and finding out the insurance plan which suits best according to your need and requirement, you can do the uploading of KYC documents and securely make an online payment to buy your term insurance easily from the comfort of your home.
Bottom line
To assess your family’s financial requirements is to be done carefully. Always do online research of the insurance policy which suits best according to your requirement and needs. There is no need to keep myths in your mind regarding the insurance plan. Always remember that regardless of your age or savings, keeping your family protected with life insurance is always a wise choice.
