Having a life insurance policy is the best way to make sure your family is taken care of financially after you pass away. However, many persistent myths about life insurance can make it hard and confusing for many people to buy the right policy. Here, we break down some of the most common myths about life insurance so you can make an informed choice:
- Myth 1: All life insurance plans are expensive.
Actually, not all life insurance plans are expensive. For instance, a term insurance policy is the simplest type of life insurance plan. It gives the insured’s family the most coverage for an affordable amount of money. These types of life insurance protect the insured’s family financially and help them deal with their obligations if the insured passes away during the policy period. The policyholder can pay the premium once a year, twice a year, three times a year, or once a month, depending on what works best for them.
- Myth 2: Life insurance is not a good way to save money on taxes.
Tax savings are just one of the benefits of life insurance. The fact that the policyholder can get a tax break under Sections 80C and 10(D) of the Income Tax Act is an added bonus. Also, the life insurance plan gives the person a chance to build up a financial cushion over time so that they can meet their family’s future financial needs.
*Taxation varies based on the old and new tax regimes. It is subject to change.
- Myth 3: Single people don’t need life insurance.
When single people plan their finances, buying a life insurance policy is probably the last thing that comes to mind. But, if you are single, you have a significant advantage because your money will grow over time. Most life insurance policies have much lower premiums for young people. The financial coverage can also be financially beneficial to your parents if something were to happen to you.
- Myth 4: Only old people need life insurance.
Most young salaried people think that life insurance is for older people (30 years or older). But a life insurance plan can help you more if you buy it sooner rather than later. We all know that bad things can happen to anyone, anywhere, at any time. Hence, getting insurance as soon as you start making money is essential. Another benefit of buying a life insurance policy when you’re young is that you can choose to have more coverage for a lower premium. This is because young people are less likely to get severe illnesses than older people, making them less of a risk for insurance companies.
- Myth 5: Group insurance is enough.
Group life insurance is something that many companies offer to their employees. But group life insurance only works as long as the person works for a certain company. If a person loses life insurance because they lost their job or changed jobs, their family’s future finances can be at risk. Also, the coverage amount of group life insurance might not be enough to provide for the whole family financially. So, buying a life insurance policy for yourself is important so that you don’t have to worry about anything going wrong.
- Myth 6: Life insurance only provides a death benefit
This is the most common false belief about life insurance policies. Yes, a life insurance policy does give the insured’s family financial protection in the form of a death benefit in case the insured passes away. But the life insurance plan has a lot of other good things to offer. Some plans for life insurance also provide returns in the form of a “maturity benefit.” Life insurance plans, such as a ULIP and an endowment plan, help people meet their needs for investments and savings. Many life insurance products come with a retirement element to ensure that a person has a safe financial future after retirement.
Thus, life insurance is a highly beneficial financial product. With the right kind of life insurance suited for you, you can save money, secure your family’s future, get returns on investments, protect your finances, plan for your retirement, and much more. A life insurance premium calculator can help you determine one that suits you.
