Top Insurance Myths Explained
Ever since Covid-19 has struck the world, more and more people have understood the importance of insurance. The insurance-averse Indian has started looking for appropriate coverage that can save him as well as his family from the uncertainties the future might hold. But in the rush of buying life insurance, there are many doubts that can hover over one’s mind. Misinformation and miscommunication can often turn these doubts into myths.
Here, we have tried to bust the most common myths so that you are in a better position of making a well-informed decision.
Myth # 1: Only the primary earner needs insurance.
There is no denying that the primary earner in the family definitely needs insurance, but that doesn’t imply that others don’t. Imagine if your stay-at-home spouse passes away, would you be able to take care of all the expenses on your own. The household chores that were being managed by your partner, you would now have to hire people to manage. It, therefore, becomes equally important that the home-makers are also covered under appropriate life insurance.
Myth # 2: The main aim of insurance is to save on taxes.
The premium that you pay towards insurance is tax-exempted under Section 80C of the Income Tax Act, yet tax saving cannot and should not be the real aim behind the purchase. In case something tragic happens to you, you can be sure that your family’s dreams and aspirations do not get shattered due to the lack of finances.
Myth # 3: Life Insurance is useful only to the nominee.
This depends on the kind of life insurance that you have purchased. Life insurance can also offer dual benefits of insurance as well as investment. The premium in such cases may be higher as compared to a term insurance policy, but the policy will pay out a maturity benefit even if the insured survives the policy term.
Even when you buy a term plan, that offers no maturity benefit, all your life you will have the peace of mind that if something unfortunate happens to you, your family will not be in financial turmoil.
Myth # 4: If you are healthy, you do not need insurance.
It surely is not easy to imagine yourself being out of the family picture, and if you are in good overall health, you may find it all the more difficult to imagine that you could die unexpectedly. Though it is tempting to keep delaying purchasing life insurance until a later stage in life, it can be a crucial mistake. Life is unpredictable and tragedy can strike anyone anytime.
Buying an insurance policy early will not only secure the future of your loved ones, but you would also be able to save on the premium amount when you are young and healthy.
Myth # 5: Insurance is for the rich.
Contrary to this myth, term insurance is actually the easiest and most affordable way to secure the future of your family members. By paying a nominal amount as the premium, you can cover yourself for the whole of your life.
Each life is precious, irrespective of how much one earns. When you have a family, being responsible for their well being is your priority, and with insurance, you can see to it that even after you are gone, they will be financially stable.
Myth # 6: The payouts received are taxable.
The maturity benefit of a life insurance policy is completely tax-free under section 10(10D) of the Income Tax Act and the death benefit is also tax-free for the nominee.
Myth # 7: Insurance is not flexible.
Another myth that needs to be busted. No two people may have the same financial needs and thus, when it comes to insurance also, there is a lot of flexibility allowed. All insurers offer riders along with the term insurance policies. By paying a little extra, you can attach these riders to enhance the coverage.
Other than this, many life insurance policies come with the freedom to enhance your coverage as you progress in life.
Myth # 8: Buying insurance is a lengthy process.
Absolutely incorrect. When advancements in technology have touched every aspect of our lives, how can insurance remain untouched? Thanks to digitization, you need not depend on agents to purchase the right plan. From calculating the premium to choosing the right plan and the company, everything can be done within minutes from the comfort of your home.
You need to answer some straightforward questions, submit your KYC documents and pay the required amount and that all.
To sum it up
When it comes to making financial decisions about your family’s future, it is always better to be cautious. And when trying to find the best alternative, it is natural to have doubts and concerns. However, only when you are well-aware of how life insurance works, you would be in a better position to make the best decisions.