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Tata Capital > Blog > Getting a Term Life Insurance? Don’t Fall for These Common Myths

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Getting a Term Life Insurance? Don’t Fall for These Common Myths

Getting a Term Life Insurance? Don’t Fall for These Common Myths

Life insurance is one of the crucial investments an individual can make. In fact, the Business Standard reports a 50% increase in purchases of term life insurance plans, especially among younger generations and self-employed individuals. However, there continue to be countless myths about term life insurance, how it works, and why it is needed. In this article, we cover what life insurance is and debunk 5 common term insurance myths.

What is Term Life Insurance?

Term life insurance is an insurance plan which provides coverage for a set time period (for example, for 10, 20, or 30 years). If the policyholder passes away during this time, their beneficiaries will receive compensation.

Policyholders can renew their coverage once the period is over or convert to a permanent plant. While younger individuals or growing families usually take advantage of this option, it can also benefit older individuals, couples, or families.

What are Common Term Life Insurance Myths?

While term life insurance is a popular investment, several misconceptions exist regarding who can purchase it and why it is beneficial. Here, we cover the 5 most common myths about term insurance and the reality behind them:

1. A life insurance cover of Rs. 1 crore is enough 

When buying term life insurance, many financial institutions market their plans worth Rs. 1 crore. As a result, many individuals opt for this policy. However, calculating the insurance coverage that works for you and your beneficiaries must consider several factors. For example, monthly expenses, liabilities, life events, retirement plans, and other goals should be accounted for. Any mutual funds, fixed deposits, and pension funds should also be considered.

2. Only married people or families need insurance cover

Many people in India believe single people do not require insurance coverage and that term plans are best suited for families. However, this is not always the case. Investing in term insurance to cover personal loans, car loans, or credit card bills can ensure that the burden to cover these costs does not fall on the individual’s immediate family. It can also be helpful for individuals who are the sole breadwinners in the family.

3. Only sole breadwinners should buy term life insurance plans

Term life insurance policies are not restricted to breadwinners of the household. Stay-at-home spouses and parents can also avail themselves of them. The amount can be used to cover any financial necessities in the event that they pass away.

4. People with savings do not require term life insurance plans

While savings are significant, they are seldom enough to cover unforeseen costs (like medical expenses, expensive home loans, and more). For example, if an individual passes away, their savings may not be enough for their dependents to pay off debts, loans, and medical expenses. Term life insurance policies protect them against these events and ensure they won’t financially devastate the remaining family. 

5. Older individuals cannot buy term life insurance

Term life insurance is usually an investment for young couples and families. In India, the notion exists that those over 40 cannot avail of these plans. However, many insurance companies and financial institutions allow people to buy term policies until age 65. These can ensure protection for beneficiaries in case of an unexpected accident or death.

In Conclusion

Term life insurance can be an essential investment for many reasons. It can provide a safety net for family members and dependents in case of unexpected accidents and deaths. These plans include other benefits, like riders and add-ons, tax benefits, illness coverages, etc.

Before investing in insurance plans, it is essential to view different options, examine the terms and conditions, and decide which features best benefit you. Whether you need expert guidance or tailored financial strategies, Tata Capital Wealth can help you every step of the way.

To learn more, visit the Tata Capital Wealth website today!

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