A life insurance plan is a worth buying insurance product and they come under various categories which offers benefits as per specific objective but if you buy them without proper planning can lead to long term financial trouble .People generally get driven by various myths around life insurance plans and make wrong buying decisions. Insurance products other than life are primarily meant for protecting you against short term financial emergencies but when we should be looking at life policy we should look at their long term financial implication. Your investments may be a great tool towards achieving your financial goals but for achieving it you always need a disciplined method with regular investing but what if you are not there, the financial goals are still there because the goal which you were looking to achieve doesn’t only affect you but also your dependents.
A cleaner approach to life insurance planning helps you stay on track and acts as a way to fine tune your financial plan by protecting the achievement of your financial goals even if you are not there. But the problems lies when people get trapped under the various myths around life insurance, they are called myths because people generally fail to understand their underlying meaning.
Buying life insurance at an early age. Though lot of financial pundits might advise you because at a younger age the insurance company consider the risks associated with you is less so they charge low but you should also know that the amount of life insurance plans cover which one should consider buying at any point of time should be in line with the financial worth that you owe to your dependents so it primarily dependent on the income that you earn. Buying early can be effective decision but it not that you should not buy it at the older age. As you progress in age not only your financial capability increases but always your liabilities also. The market value of the goals also increase powered by inflationary factor and also the inherent value depending on the current lifestyle.
Separate investment from protection. So when you are looking the cost of investment management and the cost of insurance things were really bad at the time when traditional ULIPs were launched In the old version of ULIP the cost of investment was actually very high so smarter investors resorted for mutual funds for financial goals attainment and term plans for protection, but if we look at the modern context and from the perspective of long financial planning strategy now the investment cum insurance plans are now quite effective in terms of cost also. It is advisable if you are looking a smart solutions don’t separate investment from protection but rather look at options which have twin features.
Hide health facts to lower premium. People generally think that concealing health facts is good for health insurance but why to do it for life insurance because it helps you in savings money in premium. Your insurance provider evaluates the cost of the cover that you have opted for depending upon your age and state of current health. A non healthy person can be more risky from the perspective for a life insurance company and if you don’t disclose your proper health records your dependents may face problem while making claims. In a situation like the original objective of why the plan was bought is deceived. So it is always advisable while making a life insurance planning you should always disclose information is detail. You should also disclose if you have an existing cover.
Insurance is not just meant for tax savings. Of course it is true you can get tax benefit under Section 80C every year for the amount of premium that you pay but it is always seen people buy small policies just with the objective of savings tax. In a scenario like this you end up blocking a huge amount of money but you actually get anything out of it. Once remember that insurance is primarily meant for protection not for tax savings.
A person planning for life insurance policy cover actually try and understand each element of the plan and see things from the perspective your long protection needs and don’t get carried away by the different myths as discussed above. A smarter plan for protection can always help in executing you financial plan in the best possible,
Always try to make effective comparison between plans from various insurance provider online to a make proactive decision towards better long term financial health.