Term Insurance: Five Myths Demystified

When it comes to a term insurance plan, there are quite a few myths related to it. People often feel that a term plan would burn a hole in their pocket and remains a futile exercise to invest in. 

Here’s the lowdown on a few myths that surround term plans and related facts to clear the air.

Myth-1: Term insurance is costly

Fact: On the contrary,  term insurance is quite affordable and is suited for individuals with any form of budget. For instance, a 30-year-old non-smoker can go in for a term plan with a sum assured of Rs 10 lakh for as less as about Rs 500 a month. 

In addition, term insurance plans are customisable, allowing an individual to choose the policy term and coverage amount that suits their respective needs and budget. This flexibility means that a person only pays for the coverage they need, making term insurance a more affordable option instead of other life insurance.

Myth-2: A term plan is not required if one has savings

Fact: Savings are an ideal way to ensure having sufficient liquid funds to address any eventuality in life. However, savings may not be sufficient enough to address any emergency situation or a scenario where one loses their job. Term Insurance assures protection against any unexpected events and aids to ensure that any health or other concern won’t become financially devastating for an individual or their family members.

Myth-3: Term insurance is only for individuals with dependents

Fact: In the case where an individual has any debt, such as a mortgage or education loan, term insurance can extend a safety net to ensure that the close family members are not burdened with debts if something happens to the individual.

Myth-4: Term insurance only aids in tax-saving purposes

Fact: Tax-saving benefits are a mere byproduct that serves as one of the advantages of a term insurance plan. The main benefit of a term insurance policy is to financially protect the family members in case of an unfortunate event. 

Myth-5: Term plans are a waste of money as there are no survival benefits 

Fact:  While it is true that a term plan is a pure protection plan with the sole purpose to provide financial security to an individual’s dependants in case of any eventuality. It is no less than an investment that provides an individual with monetary returns.