Top 10 Interesting Myths & Facts about Life Insurance

Life insurance is a contract between the life insurance company and the insured customer wherein the insurance company agrees to pay the maturity benefit to the insured or the death benefit to the nominee of the insured in return for a nominal amount known as “Premium” which is to be paid by the insured customer to the insurance company on regular intervals. Life insurance is a contract that protects against the financial consequences of death or disability. Insurance companies provide life insurance to individuals who are at risk of losing their income due to death or disability. ..Read More

There are many myths surrounding life insurance and how it works. Many people believe that life insurance is just a way to get money from your family after you die. However, this is not the case. Life insurance can be used to cover funeral expenses, medical bills, and other financial obligations in the case of a sudden or unexpected death. It is important to know the facts about life insurance to make the best decisions for yourself and your family. In this article, we talk about interesting life insurance myths and facts to make the right decision on life insurance.

Common Myths and Facts about Life Insurance in India

Life insurance is an important financial tool for people. It helps in the event of death and provides a sense of security to the family members.

Life Insurance Myths and Facts

#1 Myth

Life insurance is expensive.

Fact

Life insurance is not expensive as it is a financial tool that helps in case of death. Life insurance is an investment that you can make to protect your family. It is important to understand the risks involved with life insurance and how the costs vary depending on what you are looking for. The cost of life insurance can vary significantly depending on what type of life insurance policy you are buying. Many factors affect the cost, including your age, health, and sex.

#2 Myth

Life insurance is not safe because of the high risk involved in it.

Fact:

Life insurance policies are very safe because they have been thoroughly checked by experts before being issued. Life insurance companies offer a variety of policies to protect people from the high risk involved in life insurance. Life Insurance can be a little expensive investment and many people are hesitant to take out a policy because of the high risk involved in it.

But, with proper planning and care, life insurance can make sense for those who need protection from financial ruin or death. If you have a family member who has had a medical condition that would cause them to die if they were unable to afford medical treatment, then life insurance is worth considering as an investment.

#3 Myth

Life insurance policies are not tax-friendly because they are meant to provide lump sums amount at the time of death.

Fact:

Most life insurance policies offer tax benefits such as tax exemption on premiums paid, investment returns, etc., which makes them more beneficial than other investments like stocks or mutual funds. The government of India has started encouraging people to purchase life insurance policies by providing tax exemption for the premium paid under a life insurance policy.

Under Section 80C, life insurance premiums paid is eligible for a tax deduction of up to Rs.1.5Lacs. Under section 80C of the income tax act 1961, other options can be used to claim the tax deductions, or the entire life insurance premium amount can be claimed under the 80C section. Under section 10 (10D) of the Income-tax Act,1961 any amount of sum insured plus the accrued bonus paid on Maturity or Surrender or Death of the policyholder are tax-free if the premium payment in any year exceeds the prescribed percentage of the actual sum insured.

#4 Myth

Life insurance is not needed if I am young and healthy.

Fact

Many believe that life insurance is not needed if you are young, healthy, and have a low risk of dying. However, life insurance is still very important to protect your assets and income if you die suddenly or are unable to work. Moreover, Life insurance premium primarily depends on the age of the prospect. You should get insured at a younger age, you'll qualify for lower premiums. And as you get older, you could develop health problems that make insurance more costly or even disqualify you from buying a plan. Buying life insurance at a young age has an important economic impact, much like delaying saving for retirement. The earlier it is purchased for life insurance, the better.

#5 Myth

Buying Life Insurance Online is Complex.

Fact

Buying life insurance online is a fairly simple process. One of the best things about buying life insurance online is that you can compare different life insurance quotes online for free of cost. You can compare quotes with different insurers and get the best life insurance policy online. It takes just a couple of minutes to compare different types of plans and to eliminate the need to consult with several insurance agents in person.

While buying a life insurance policy online keep the required documents within reach. Once you choose the policy you want, send in the scanned documents and fill in the details. While completing the online process you will be informed of your premedical tests if there are any needed. Online insurance policies can be purchased from any place at any time.

#6 Myth

Single People Don’t Need Life Insurance.

Fact

Single people don’t need life insurance because they are not married or have children. This is a false statement because singles can purchase life insurance policies for certain milestones in their life, e.g., to pay off debts, retire savings, cope with medical expenses, etc.

#7 Myth

A homemaker does not need a life insurance policy.

Fact

A life insurance policy is an important consideration for every woman. The reason is that they are the primary caretakers of their families. This means that they are more likely to take care of the children and elderly relatives at home as well as take care of the household chores. In addition, housewives also have a lot less income than their working counterparts.

In case something happens to the housewife, her family would be left without any source of income and would have to do everything on their own. A life insurance policy can help them in such a situation by providing some additional income in case she leaves this world prematurely or by taking care of her funeral expenses if she dies suddenly or is too young.

#8 Myth

You cannot purchase a life insurance policy if you have a pre-existing illness.

Fact

You might have a hard time getting insurance if you have an existing illness, but there are still options available for those who can't find anything in the market. Insurance companies offer quotes according to risk evaluations so always keep it in mind when looking for insurance. Moreover, it is advisable to disclose every necessary detail about your condition to get the best plan for yourself.

#9 Myth

Don't need a life insurance policy if have group life insurance provided by your employer.

Fact

A group life insurance policy will provide coverage according to your salary and position in the company. What you can't do with it is convert it into an individual life insurance policy, which is understandable when you think about why they have separate products and what if you quit your job. Hence, separate life insurance should be purchased that will meet your needs and requirements, and also you can have additional rider benefits when you buy an individual life insurance plan.

#10 Myth

Life insurance premiums skyrocket when I turn 60.

Fact

This is not true as rates are generally more competitive than they used to be. If you're considering getting a new policy, now's a good time to do it! Life insurance is not just for people who are young and healthy. Anyone can purchase life insurance as long as they have enough money to cover the premiums and the cost of medical care if they die prematurely. Senior citizens over 60 years old can get senior citizen life insurance policies from different companies, but they must check the company’s rating first to ensure that they are getting adequate coverage and affordable premiums from them.

Conclusion

Life insurance policies are one of the most important financial decisions that a person can make. It is a decision that will have an impact on their loved ones. So, know all the myths and facts about life insurance policies before purchasing. Compare life insurance quotes with different insurers online at PolicyBachat to get the best life insurance policy.

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