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When we speak about life insurance, most people are not aware of the complete benefits this highly essential financial tool offers. The low penetration of life insurance products in the country leads to a lack of complete knowledge and even gross misinformation.
Unfortunately, these misconceptions discourage many individuals from investing in life insurance products.
The article below aims to address the top life insurance myths and provide relevant facts surrounding life insurance plans.
Let’s weigh some common misconceptions or myths surrounding life insurance against the facts to make your road to attaining adequate coverage smoother.
| Myth | Fact |
| Life insurance is only about life protection. It is valid only after death. | While the core benefit of life insurance policies is life cover and death benefits, they are not limited to that. It all depends on the type of life insurance plan selected. For example, retirement plans can make you financially independent later in your golden years. Similarly, ULIPs are an excellent wealth-building-cum-life cover tool. |
| Life insurance is for people in their 40s and 50s. | Life is full of uncertainties and risks, whether health, accident, or even death. An insurance plan can provide financial support to your family in your absence, especially when you are young, earning, and have responsibilities. Additionally, when you buy a life insurance policy in your 30s, you attract affordable premiums, get more extensive life cover, have fewer chances of your policy getting rejected, get relevant riders to enhance your plan, etc. |
| Life insurance is expensive. | These days, insurance companies offer numerous life insurance policies with multiple customisable features depending on the policyholder’s needs and budget. You can select the best life insurance policy with proper research and need assessment. You can start with a lower sum assured and then increase it gradually with your income. You can even opt for pure life plans like term insurance which are highly affordable. An online premium calculator is the best way to calculate your estimated premium. |
| Employer-funded life insurance coverage is sufficient. | An employer-funded life insurance policy may be just enough if you are a single person with no dependents or responsibilities. Even then, you may need additional coverage upon death if you have certain liabilities. Moreover, insurance provided by your employer, in most cases, is available only till you hold up to that job. Your policy gets terminated on your job change. For individuals with dependents, employer-funded insurance may not be sufficient for your family’s future. |
| Life insurance claims are generally rejected. | As per IRDAI’s 2021-22 annual report, the life insurance industry’s individual death claim settlement ratio now stands at 98.64%, which makes the rejection ratio very low. However, ensure you understand the policy’s terms and conditions and exclusions to avoid rejection. Also, look into the insurance company’s claim settlement ratio (CSR) and solvency ratio before you decide to buy the policy. |
| Buying or claims process for life insurance is troublesome. | Digitisation in the insurance industry has made the whole process hassle-free and quick. You can now compare and buy life insurance online with a few clicks. You must check the premium first, answer a few questions, complete KYC formalities, and then securely make online payments to buy a policy. Similarly, you can file a claim online in a few simple steps. For instance, with a Tata AIA policy, you can now ‘Claim with Ease’ as it provides varied options to file for claims, like through email or WhatsApp. |
Quick Tip: When buying a life insurance plan, always speak with an insurance expert or financial advisor who possesses good knowledge about various life insurance products and which product is best suited for your needs and financial goals.
The importance of having a life insurance policy as a part of your financial plan cannot be stressed enough. The key here is not to leave out such a crucial financial tool from your plan unless you have considerable assets to cover your loved ones long after you are gone.
So, avoid falling for these life insurance myths and invest in a well-researched life insurance plan with adequate coverage.
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