Proper planning is crucial for the financial stability of you and your family. An important inclusion in your financial plan is a life insurance cover. Unfortunately, life insurance is not given much importance for several reasons.
One reason is that people do not like to talk about death. Insurers offer different types of life insurance policies, which make it confusing and cumbersome to understand. Another reason is that life insurance is often confused as several myths surround it.
Here are five life insurance myths that are commonly associated with these policies:
- Life insurance is unaffordable
Traditional insurance plans like moneyback and whole life policies are expensive as the premium is high. The reason for the higher premium is that such plans provide maturity benefits along with the life cover.
The most affordable and simplest way to procure higher coverage at an affordable premium is to purchase a term plan. The benefits of the plan are paid to your beneficiaries in case of something unfortunate happens to you during the policy tenure. An affordable term life insurance premium is an excellent way to secure the financial future of your family in your absence.
2. Life insurance is for older people
When you are young and healthy with not many liabilities, life insurance does not seem important. However, life is uncertain and you may never predict what may happen at any time. Therefore, it is important to avail of such coverage at a young age.
One benefit of purchasing insurance at a young age is that you will have to pay a lower premium. This allows you to procure more coverage without any financial difficulty. Moreover, insurers offer different types of life insurance plans such as retirement policies, wealth creation plans, and savings plans, which help you build a corpus that may be used to meet various financial goals.
3. Group insurance is adequate
Several companies offer group insurance policies, which provide coverage for an affordable premium. Often, you may believe that this coverage is adequate to cover the risks.
However, you must remember the coverage is available only until you are employed with the company. If you quit or are fired, the insurance coverage is discontinued. The coverage is also not available when you retire. Procuring coverage at an older age may be very difficult and expensive, which is why life insurance is important in India.
4. I am single; I do not require life insurance
When you are single and have not many responsibilities, you may invest in plans to benefit from the compounding effect. This means your money has a longer period to grow. Compounding offers additional returns on the income earned from the original investment.
Wealth creation and retirement plans are excellent policies to build a larger corpus over a longer period.
5. Life insurance is only for breadwinners
As the breadwinner of the family, securing your family’s financial security is very important. Life insurance in India ensures your loved ones can sustain their lifestyle and meet their expenses without facing any financial distress in case of any untoward incident. You must also choose children plans that provide periodic returns to ensure their education expenses are met without any issues. Moreover, your spouse will require financial liquidity during the retirement years in your absence and securing this with insurance is recommended.