It has always been said that a little knowledge is dangerous. Life insurance is a classic example of that very saying.
Just like most people in our country, you might be having skewed, limited or outdated notions of what life insurance is all about. You might not even know that you have little understanding of the benefits it can give you or when and for whom is it a must. This skewed information might cause you to miss out on the benefits of a solid financial protection backup.
In light of the rampant information gap problem, here are 5 of the most common examples of limited knowledge that causes faulty insurance decisions:
- All Life Insurance Plans Are Endowment Plans
There’s a general notion that all life insurance plans are only endowment plans. You might be assuming that buying life insurance implies saving a decent fraction from your present income and investing it to receive back a sizeable corpus in the future on the maturity of your policy in case your dependents don’t have to make the unfortunate claim for the death benefit.
However, that is a very restricted notion. Life insurance includes an array of options that can be chosen specific to your situation, objectives and can also be an investment vehicle depending on your savings budget. The fact is that it is a wonderful way to secure your finances, invest for long-term fund accumulation in addition to the death benefit.
For instance, if you wish to invest your money linked to market conditions to make big gains, yet have the security of an insurance policy, you have the option to go for ULIPs. Alternately, if you don’t have the surplus funds to be able to afford the premium for an endowment plan, you could opt for an online term plan that provides a sizeable death benefit to your family against a very nominal premium. If you have children, you can also look at child plans that take care of their financial needs at different milestones in their lives, whether you’re alive to support them at that point or not.
In short, there’s something meaningful for everyone, irrespective of the present income levels and life stage when it comes to buying life insurance online and protecting their dear family.
- There’s No Difference Between an Endowment and A Term Plan
Most people confuse between endowment and term plans and think they’re the same. In light of this limited knowledge, they often miss out on buying insurance altogether if they don’t have surplus funds to pay for the requisite premium.
However, in reality, term plans and endowment plans have a slight difference that might be very meaningful for some people. Endowment plans are those that offer both death benefits and maturity benefits once the policy tenure is completed. You can look at them as an investment option in addition to a financial security option.
Term plans on the other hand offer only death benefit, which is why their premium charges are much lower in spite of the sizeable sum assured. So, if you’re short on funds, term plan can be a wonderful option you may consider.
- Investing in Term Plan Is A Waste of Money
You might be having the notion that term plans are a waste of money for there is no return from the premium money paid in case there is no need for the dependents to file for a death benefit. However, such reasoning is completely flawed and might lead to a very faulty decision based out of sheer ignorance.
The truth is that online term plans are exceedingly helpful to secure a large corpus of money for your dependents in case of your unforeseen or untimely death. While you work extra hard and undertake that additional stress to save money to leave behind for your family, term insurance is a relatively simple way to secure a really huge sum in case you’re no longer there.
Life insurers like Max Life Insurance make that possible by offering term plans that are extremely affordable and cost-effective. Their premium payments are really low for a relatively high amount of sum assured.
- Life Insurance Is Only Meaningful for Tax Saving
It’s true that one of the benefits of life insurance is tax saving. However, that’s not the only, and the main reason why buying insurance is an attractive option. If you think about it, you will realise that peace of mind and a sense of financial security is something that cannot be valued in terms of money. It impacts any person’s overall well-being and quality of life.
In light of that, insurance is a great way to purchase that financial security for your family and yourself while you live. It can be a big comforting factor for you in your working years and make you feel a reduced burden to save and earn that extra money for your dependents in case you are no longer there to take care of them.
- The Terms and Conditions Are Very Complicated
It is an outdated notion that the terms and conditions are complicated. As on today, there’s immense amount of flexibility and transparency available to choose the terms of the policy, the premium payment tenure etc. You also have a lot of add-on riders available to completely custom make your policy in your favour.
With all of the popular wrong notions debunked, don’t shy away from that one decision that can help you and your dear ones live stress-free. That said, purchase life insurance online as per your needs and goals and invest in your family’s financial security today.