When it comes to buying a life insurance, we often come across several confusions and because of some myths and we end up buying a wrong life insurance plan for us.
So, here we have brought a crash course on several life insurance myths which we (most of us at least) follow blindly and end up getting nothing.
Without wasting any more seconds, let’s get started:
#1 I am single and also don’t have any dependents, so I don’t need any type of life insurance
Just because you are single or u have no dependents after you, doesn’t mean that you shouldn’t buy life insurance.
One thing, you must understand that life insurance is not only about providing money when you die, it also covers the costs of personal debts, medical and funeral bills when you die.
So, it is a myth that singles or people who don’t have dependents, shouldn’t waste money on buy life insurance.
#2 Life Insurance coverage should only be twice as my salary
Not necessarily. I mean, the coverage amount of your life insurance depends on many factors, not on the salary you are getting.
As a simple example, sometimes medical expenses go way higher than your salary and that situation what would you do.
So, it’s always advised that you should buy a life insurance plan understanding your family’s and your condition.
Here condition includes the amount you are capable of paying as premium.
#3 My Term Insurance Coverage is sufficient
Sometimes it is true that your term insurance coverage becomes sufficient for you but not always.
Suppose, if you are a single person (without family) then a simple employer-provided term coverage would be enough but if you have a family, then surely you need some extra coverage to take care of your family after you.
Just understand your and your family’s requirement and then buy.
#4 I must buy a life insurance at any cost
It’s not a mandatory stuff but still, it is preferred to have one as it safeguards your family from financial crisis after you.
Suppose, you don’t have life insurance and suddenly you met with an accident and died on spot. How your family (dependents) would live after you.
And if you have a life insurance, your family’s financial requirements are secure (at least to some extent).
#5 Term Insurance is better than Whole Life Insurance
Taking an insurance depends completely on your requirement, so one can’t justify that term insurance is better or the whole life insurance is better.
You can always compare both types of life insurance and then decide.
For a simple understanding, here are few points:
- Term Insurance has affordable premiums, unlike whole life insurance.
- Whole life insurance provides a cash value after maturity, which is missing in term insurance.
- Term Insurance is valid for a certain period of time but whole life is valid for lifetime.
#6 Only breadwinners need to have a life insurance
This isn’t a fact, I mean if we talk on logics, the more life insurance policies a family have, the more financial secure they become.
So, it’s advised to buy life insurance for everyone if possible and if not possible then buy at least for the people who have dependents under them.
#7 Buying Return-Of-Premium (ROP) is not cost-effective
Many life insurance agents would suggest not to buy the return of premium plan, saying these aren’t cost-effective.
Well, the first thing here to understand is, what return-of-premium means?
Actually, the ROP term life insurance are slightly different from normal term life insurance, means in ROP if the insured party has survived the policy’s term (maturity date), the insurance company would return all the premiums paid for coverage.
So, it’s clear why insurance agents suggest to not to buy such plan as these plans are not so profitable for their company.
#8 Investing Money is better than buying a life insurance
Investing your money somewhere is not a bad option but in some cases, life insurance plays an extra role in order to protect you and your family financially.
Experts believe that investing money turns out to be a good option in long-run but life insurance secure your financial life from start to end.
#9 Life Insurance is only for older people
Life Insurance is for everyone but it is advised to buy a life insurance plan at the young age, maybe around 20.
The main reason to buy life insurance at the early age is, at that time you get to pay a lesser amount as compared to what you would get to pay in older days.
#10 Life Insurance is not affordable
Not all life insurance policies are costly.
There are term life insurance plans which give huge coverage at very nominal premiums, so the myth is completely wrong.
However, whole life insurance may feel costly, as the insured party has to pay full coverage amount in installments (as premiums).
So, if you don’t want to spend much, buy term life insurance.
So, these were the 10 most common myths regarding life insurance.