Term life insurance is a simple, basic and traditional form of life insurance. All you need to do is pay a premium amount annually. The plan is valid for a fixed period known as the term or tenure. There is a fixed sum assured. If you die within the duration of the policy, your nominees get the sum assured.
Myths and Misconceptions
As simple as term life insurance is, there are a few myths and misconceptions around it. These may have been keeping you from buying term life insurance so far. The reality is quite different.
Join us as we bust some of the most popular myths around term life insurance.
Term Life Insurance of ₹1 Crore is Enough for Everyone
The amount ₹1 Crore is a ballpark figure that might suit the average family. Hence it is popular.
The reality is that the ideal sum assured differs from person to person. Term life insurance covers your family’s expenses in case of your untimely demise. The needs and expenses of each family are different. So will the term life insurance’s sum assured.
In reality, you are better off calculating the ideal sum assured for your family.
One rule of thumb that you can use is to consider 15 times your annual expenses to calculate the sum assured. Another way is to estimate manually how much money your family will need. Read along to know how you can do that.
Add all of your liabilities like home loans, personal loans etc., to it. Deduct all of your liquid assets like fixed deposits, mutual funds and stocks.
Using these techniques, you can arrive at the appropriate sum assured for your family.
Read more about Term Insurance at OneAssure by clicking here.
You Have to Die to Claim Term Life Insurance. Hence, it is a Waste of Money
If you survive the term life insurance, you may not get your premiums back. Other insurance products may provide a return of premium. Most term life insurance policies are not designed to provide you with maturity benefits.
However, think about what would occur to your family in case of your premature death. Who would take care of their needs and expenses? Term life insurance covers the expenses of your family in case of your sudden demise.
Singles Don’t Need Term Life Insurance
You might be thinking: I am single right now. I don’t need term life insurance. I will think about it when I start a family of my own.
In reality, you need term life insurance at every stage of life. Even if you are single, you may have a personal, home or automobile loan. In case of your untimely demise, whom do you expect to take care of these liabilities? You may not have a family of your own. However, your parents, brothers or sisters may be dependent upon you. They should not be riddled with your liabilities in case of your premature demise.
Term Life Insurance Plans are Expensive
You may be thinking that term life insurance plans are more expensive than other insurance plans.
The reality is far different. As it turns out, term life insurance is one of the most cost-effective kinds of insurance. Can you guess the premium for a term life insurance plan with a sum assured of ₹1 Crore? You may be surprised to know the annual premium. It might be in the range of ₹10,000 to ₹20,000 per annum!
You can read this article at Financial Express to know more about term insurance premiums.
Term Life Insurance Claims get Rejected a Lot
You might think that you already need to forego the maturity benefits. In addition to that, your claim will likely be rejected even after death. Thoughts like these might keep you away from purchasing term life insurance.
In reality, the claim settlement ratio of term life insurance plans is very high. You should disclose accurate and proper information about yourself while purchasing the policy. If you do that, the chances of claim rejection are pretty low.
Examine the Proposal Yourself
Don’t fall prey to the myths about term life insurance. A lot of the myths are untrue and might keep you from purchasing term life insurance. Examine the proposal yourself to understand the reality.