5 Myths About Term Insurance Busted

5 Myths About Term Insurance Busted

While it may often seem like a no-brainer, misinformation can make a simple thing like term insurance look complicated. Being one of the most basic and affordable insurance options, term plans have been popular for long. Despite all this, there are still quite a few myths and misconceptions that revolve around this pure protection plan.

A term insurance plan is a straightforward protection plan. The insured pays a premium to the insurance company, in exchange for which the company covers him/ her for a specific period of time. If the insured individual dies during this term, the nominee/ nominees receive the sum assured. However, if the insured survives, no payout is made, and the policy comes to an end.

5 myths about term insurance busted

There are varied viewpoints and also some myths regarding term insurance plans. Especially if you are new to the insurance market, you may have come across various myths. Here are some of the 5 most misunderstood concepts of term insurance:

Myth 1: Term insurance is expensive

Many people believe that term insurance is an expensive deal. The premium in itself may sometimes appear so, but when you compare the ratio of the premium charged vs the coverage you are offered, it definitely nullifies this myth. Term insurance offers coverage of ₹1 crore or more. And in case of the unfortunate demise of the insured individual who was also an earning member, an adequate sum assured can be a relief for the family left behind. In such a condition, it is a deal worth it.

Myth 2: Term insurance does not offer any benefits

Another popular myth is that term insurance does not offer any maturity benefit. Let us debunk this myth, once and for all. A term benefit is reliable financial aid in case of any mishap to the life of the insured, especially if the insured is the sole bread earner in the family. Apart from this, term insurance also offers a savings element in the form of a TROP.

If the insured outlives the policy term, at the time of maturity, the premium amounts that have been paid throughout the term plan are returned. This kind of plan is called Term Return of Premium, TROP. Term insurance also offers tax benefits. Under Section 80C of the Income Tax Act, 1961, the policyholder can avail of tax deductions of up to ₹1.5 lakhs. With critical illness cover plans, one can get tax deductions up to ₹25,000 under Section 80D of the IT Act. Last but not least, Section 10(10D) of the IT Act, 1961 offers tax exemption of the death benefit offered to the family of the insured.

Myth 3: Your corporate term insurance is enough

The term insurance benefits offered by your corporate institution may seem enough, but that may not be the case in reality. You must analyze the monthly expenses of your family and need to have a cover that can help your family be financially sorted in your absence. Now, ask yourself, is your corporate term plan sufficient? Probably not. So, why not look around for more comprehensive and wider coverage to ensure the financial stability and overall well-being of your family?

Myth 4: There’s no flexibility in a term plan

Since term plans are pure life insurance plans, it is often believed that they do not offer flexibility. However, in reality, a term plan is highly customizable.

• From 5 years to 50 years or even more, you can choose the term you prefer the most.
• The premium payment can be monthly, quarterly, half-yearly, or annually. You can also pay the entire premium in a lump sum.
• The policyholder/insured can purchase various add-ons for increased coverage, like accidental death benefits, critical illness coverage, and so on.
• You can also opt for a return

In conclusion, debunking the myths surrounding term insurance is essential to make informed and prudent decisions about our financial future and that of our loved ones. Term insurance, contrary to popular misconceptions, offers affordable coverage with substantial benefits, making it an ideal choice for many. Remember, term insurance is not the only life insurance option available, and exploring different plans based on individual needs is crucial. By understanding the true facts about term insurance and its various benefits, we can secure our family's financial well-being and embrace the peace of mind that comes with comprehensive protection. So, let's dispel the myths and make the right choice for a secure future.