16 Most Common Myths About Term Insurance Busted

Truth – Contrary to popular belief, Term Insurance is affordable and can fit within the budget of most individuals. For example, a 30-year-old non-smoker can get a term plan with a sum assured of Rs 10 lakh for approximately less than Rs 500/- per month. Moreover, Term Insurance Plans are customisable. Thus, you can choose the policy term and coverage amount that best suits your needs and budget. This flexibility ensures you only pay for the coverage they need, making Term Insurance more affordable than other life insurance plans. 

Truth – Your financial responsibilities increase with age, which calls for a protection plan for unexpected circumstances like death or disability. If you're in your 50s or 60s and have done well for yourself financially, it makes sense to buy a term policy now rather than later when you may be older and more vulnerable to risk factors such as illness or injury that could prevent you from working again. 

Truth - “What if I'm a stay-at-home parent?" you might ask. Can I still get Term Insurance?” The answer is yes. Even if you are not the breadwinner and your spouse provides for the family, you will still need to cover your financial obligations in case they pass away. It's often more important for a stay-at-home parent to have Term Insurance than someone who works outside of the home because they may not have any other source of income besides their partners'.
 

Truth - Savings may not always be enough. You might have enough savings to cover your debts, but what if you don't? For example, what would happen if you take out a loan to buy a home and then lose your job or get sick and can't work anymore? Your family would have no way of paying off the loan. Or who will foot the bill if one of your loved ones gets into an accident and needs expensive medical care that isn't covered by insurance or government programs like PM-Jay and ESIS? Term Insurance protects against such unexpected events - and helps ensure that these types of situations won't become financially devastating for you or your family members.

Truth - Many people believe that Term Insurance policies do not provide benefits other than death benefits. However, this is not true. Term Insurance policies can come with various riders or add-ons that offer additional coverage, such as Accidental Death Benefits, Critical Illness Cover, and Disability coverage. These riders can provide extra protection and peace of mind for you and your family.

Truth - Another common myth about Term Insurance policies is that the claim process is lengthy and complicated. However, this is not true. Most insurance companies have simplified the claim process to ensure it is hassle-free and doesn't take much time. You need to submit the necessary documents, and the claim will be processed within a few days. Moreover, the IRDA has mandated that all insurance companies settle claims within 30 days of receiving all the necessary documents from the policyholder.
 

Truth - Many people believe that Term Insurance policies cannot be purchased online and must go through intermediaries such as agents or brokers. Most insurance companies now offer the option of buying Term Insurance policies online. Buying online is not only convenient, but it is also cost-effective as there are no intermediaries involved. Moreover, you can compare different plans and choose the one that best suits your needs and budget.
 

Truth - Many believe that Term Insurance policies are only for healthy people, and those with pre-existing medical conditions cannot get coverage. While it is true that insurance companies may charge higher premiums for people with pre-existing medical conditions, they cannot deny coverage. The insurance company may request additional medical reports or tests to evaluate the risk, but they cannot reject your application outright.
 

Truth – Another common myth about Term Insurance policies is that they are only suitable for short-term coverage. One of the Term Insurance hidden facts is that these policies can provide coverage for up to 30 or 40 years, depending on the policy. Moreover, some insurance companies offer term plans that can be renewed after the policy term expires. Term Insurance policies are a good option if you're looking for long-term coverage.

Truth - Term insurance policies generally provide coverage for accidental death and natural causes of death, such as illness or disease. Most term insurance policies include accidental death and dismemberment riders that provide additional coverage in case of accidental death or injury. Accidental death coverage typically provides a lump-sum benefit to your beneficiaries if you die due to an accident. Dismemberment coverage pays out a percentage of the death benefit if you lose a limb or suffer a permanent disability due to an accident.
 

Truth - Some people believe Term Insurance is only necessary if you have dependents like children or elderly parents. However, if you have any debt, such as a mortgage or student loan, Term Insurance can provide a safety net to ensure that your loved ones are not burdened with your debts if something happens to you.
 

Truth - One of the most persistent insurance myths about Term Insurance is that living past your policy term is a waste of money. While it's true that you won't receive a payout if you survive the policy term, the peace of mind that comes with knowing that you have financial protection can be quite critical. Furthermore, some term policies have a Return of Premium option, so you can get your premiums back if you outlive the policy term.

Truth - Your income level does not determine the need for financial protection. If you have dependents or debts, Term Insurance can provide a crucial safety net regardless of your income.
 

Truth – These days, women mostly have equal financial responsibilities as men, such as parent-care as a single child, household responsibilities, etc., making Term Insurance an equally essential asset. 

Truth - Finally, some people believe Term Insurance is only necessary if you work in a dangerous profession like construction or firefighting. However, accidents and illnesses can happen to anyone at any time. Term Insurance can provide financial protection for your loved ones in case of unexpected events, regardless of your profession.
 

Truth – Most people are under one of the most common insurance myths: purchasing term life insurance is a complicated and lengthy process; however, it is not at all the truth. Purchasing a Term Insurance policy has been simplified by the availability of online Insurance platforms like ACKO Insurance.

To choose the right Term Insurance policy, you should consider your financial situation, your beneficiaries' needs, and the coverage options available without worrying about any insurance myths. You should also compare policies from different insurance companies to find the best one for your needs and budget. 

Some Term Insurance policies can be renewed, while others cannot. If your policy is renewable, you can extend the coverage period by paying additional premiums.

If you outlive your Term Insurance policy, you will not receive benefits. However, some insurance companies offer the return of premium policies, which means you can get back the premiums you paid if you survive the policy term. 

Yes, you can cancel your Term Insurance policy at any time during the policy term. However, you may incur a surrender charge, and the insurance company will refund the policy's cash value. 

Yes, you can change your Term Insurance coverage amount during the policy term. This is known as a rider or endorsement, which allows you to increase or decrease your coverage amount if allowed by the insurer.