If you call yourself as financially planned then you should be quite aware of the importance of a term insurance policy in your financial plan.
Technically insurance is layman terms can be defined as a service where you pay a cost to a person, the so called insurer to take care of your life’s financial risk . In any case the emergency arises the insurer would take the loss on them so that the same doesn’t affect your wallet.Going by this principle a term insurance plan is the most effective and cheapest way to secure yourself from any type of financial risk. Say in a family when you are the only bread earner and the rest of the family dependent on you for regular upbringing and reaching their own life goals .Then your death in a scenario like this can be very disturbing for the rest of family.This is the biggest risk that anyway need to take care of and this is where you term insurance plan can act as the real weapon.
Though the benefits are endless but still people want to give a second thought before buying one and that is only because of myths that surrounds term insurance. Some of the common myths that need to broken are broken below
a) One of the common myths is a financial instrument which doesn’t return is not worth of investing. People might end up buying other forms of life insurance plans because they give return on maturity but avoid term insurance. This mind sound quite hilarious if you do the real calculation.A regular life insurance which gives money in return generally charges you a much higher cost for the same amount of insurance when compared with a term plan and the return on investment they offer is very less but still get carried away by the fact that the money is returning back. Actually they give you a low return because a part of the money is actually not invested and the insurer cuts the same as cost for the insurer cover it offers to the policyholder. So if the objective is just protection then it is worth buying a term plan.
b) This is a common myth that all insurers are same and they don’t give claim.This is actually a matter of trust, you should know that insurer is actually in the business of settling claim and not take away your money.Cases that you hear about claims being rejected are generally either because the claims raised don’t fall under the rules binding the policyholder and the insurer or something not being disclosed at the time of taking the policy. Hiding of information is a common phenomenon and people do it because they be might be saving some money on their premium initially .
c) Buying term insurance too early or too late is not beneficial.This is actually a technical problem is most of the people who avoid buying term insurance . It is never too late or too early.Definitely buying it at a much younger age can give you benefits of getting highest cover and lowest premium but still if you are looking at insuring your financial risk at any age term insurance is always the best and the cheapest option.
d) I already have group term policy from my employer so i don’t a individual term plan.One should keep in mind the amount of coverage should be calculated keeping perspective of the overall requirement of your family and existing financial liability. You should always look at the amount of cover the group policy has to offer and in most of the cases you will find the amount is not enough considering your family requirement so the rest of the requirement can be taken care by individual term plan. On the other hand you should always keep in mind that once you leave a particular job you group cover cease to exist so you should always have your own backup plan in place.
e) Term insurance cover can’t be increased, this is again a very common myths.Though in the old days of term insurance this used to be a phenomenon but in recent times there are many options in which when at a later age where you need a larger amount of covered because of increased income you can anyways increase the cover of the existing plan rather than buying a new plan.
f) Last but the most common of the myths is related hassles of buying term insurance plan online. People feel the process is very tiring but on the other hand the process is actually very easy. What you get as a benefit is that you are able compare a lot of other term insurance option just by a click of a button. In fact buying online give you a benefit of discount for being an online policyholder. Insurer perceive online customers as less risky because of the amount of information one has and so incentivizes the policyholder for it and the premium is quite low compared to if you bought the same policy offline,