Buying a life insurance policy is the most effective way to ensure the financial security of your loved ones. It also provides you with peace of mind by safeguarding the life goals of your family members. Various life insurance plans are available in India, and one of the popular options among them is a term policy.
What is a term insurance plan?
The term plan meaning is a life insurance policy that pays the benefit only if an unfortunate incident leads to the policyholder’s death. It does not offer any maturity benefit, resulting in more affordable pricing. This is one of the reasons behind people investing in term plans. With a term policy, you can opt for a significant cover at a cost-effective rate.
However, some people are still in two minds about term plans due to many misconceptions surrounding the policy. Here, we tell you the truth about these myths.
- Myth 1: No maturity benefit makes it unworthy
As term life insurance policies do not have any maturity payout, many believe that it is not worth the purchase. However, the lack of maturity benefit only works in your favor. While other life policies come at a costlier premium, a term plan is more economical. With a term plan, you can ensure a large cover for your dependents without having to pay a huge sum.
- Myth 2: It has a high claim rejection ratio
Term plans do not have a higher claim rejection percentage compared to other policies. The easiest way to check this is by finding out the Claim Settlement Ratio (CSR) of your preferred insurance provider. The CSR is the ratio of the number of claims an insurer settles every year compared to the total number of claims they receive. Choosing an insurance company with a high CSR will certainly increase the chances of claim settlement.
- Myth 3: You do not need a term plan if you are too old or young
Believing in this myth will only bar you from securing the future of your dependents. Purchasing a term plan when you are young is the easiest way to get attractive deals. Insurers charge nominal premiums to policyholders who are healthier and younger, as they belong to the low-risk category.
When you get older, it becomes more important to get a term policy, as your financial liabilities increase with age. When you are in your 40s, it is vital to ensure that your loved ones do not have to suffer in your absence due to your debts. You can use a term insurance premium calculator to get a clearer idea about the cost before buying a policy.
- Myth 4: You do not need a term policy if your employer provides one
Many companies offer group life insurance policies to their employees. However, the sum assured received from a group life policy might be inadequate for your family’s needs in your absence. So, even if your employer gives you this facility, you must still opt for an individual policy to ensure that your dependents never have to compromise on their standard of living.
- Myth 5: You are not allowed to increase the cover
It is false information. As you grow older, insurers allow you to raise the term policy cover. However, you need to pay an additional premium. This is necessary as your financial needs rise with time. A term insurance premium calculator will help you determine the price of a policy with higher cover.
- Myth 6: It is hard to purchase a term plan online
When you buy an online term plan, it takes you only a few minutes to complete the process and customize a suitable policy. You can visit an insurer’s website and register instantly. You can also pay the premium online to save time.
If you have not purchased a term policy due to these misunderstandings, without any delay invest in one now!