Resolving Life Insurance Myths
Published On Jun 05, 2021 11:30 AM By Shrida Gulati
Table of Contents
- Myth 1: Life Insurance is Expensive
- Myth 2: Life Insurance only provides death benefits after policyholder’s death
- Myth 3: Applicants with existing medical conditions are unsuitable for purchasing a life insurance plan
- Myth 4: Young people do not require life insurance
- Myth 5: Life insurance provided by the employer provides sufficient coverage
Life insurance can be tricky to understand at first with all the technicalities, rules and terms and conditions. Life insurance is a little complex to figure out and it leads to the rise of some of the misconceptions that need to be addressed and debunked. It is necessary to understand the concept of life insurance fully before you purchase it. Here, we will discuss some of the life insurance myths that need to be addressed in order to understand the concept of life insurance before purchasing it. Here are some common life insurance myths:
Myth 1: Life Insurance is Expensive
The most common and biggest myth that arises while purchasing a life insurance is that ‘It’s Expensive’. Life insurance is neither expensive nor cheap, it is somewhere in between. The potential customers tend to overestimate the cost of life insurance. Life insurance premiums are calculated on certain factors such as age, gender, medical history, occupation of the person, body mass index, lifestyle and personal habits such as consumption of tobacco/alcohol. So it is safe to say that life insurance costs can vary from person to person.
Myth 2: Life Insurance only provides death benefits after policyholder’s death
Generally people think that life insurance only gives death benefit after policyholder’s demise and this myth aises repeatedly. This myth is not completely true. Life insurance provides financial support in the event of a policyholder's unforeseen demise. Life insurance has various types of life insurance plans that help the applicant to fulfill their requirements as an investor. Life insurance has been classified into pure life insurance plan and life insurance plan with investment tools that provide investment opportunities for the policyholder. Term insurance plans are considered pure life insurance plans and ULIPs, Endowment, Child, Retirement and Money Back Plans offer investment opportunities along with life cover. Benefits under life insurance policies vary in different types of insurance plans.
Myth 3: Applicants with existing medical conditions are unsuitable for purchasing a life insurance plan
It is not necessary that a person who already has existing medical conditions/illness cannot apply for a life insurance policy. This is a frequently arising myth and it is not true because some life insurance companies provide life cover for people who are suffering from critical medical illness, however the insurance companies require medical examination of the applicant and if the applicant has existing medical conditions/illness then the insurance company may charge higher premiums. It is advised that the applicant honestly declares any pre-existing medical conditions/illness to the insurance company, this subtracts the chances of rejection claim because of false/incorrect information provided by the applicant to the insurance company.
Myth 4: Young people do not require life insurance
Generally it is advised to purchase a life insurance plan as early as possible so it is safe to say that this myth is baseless and untrue. While purchasing a life insurance policy the potential buyer is advised to purchase it at a younger age or as early as possible because elderly people are more prone to diseases and considered people with high risk. It is advised to purchase life insurance at a younger age and in better health condition because while purchasing a new life insurance, the insurance company requires medical examination that helps in determining the premium of the life insurance plan.
Myth 5: Life insurance provided by the employer provides sufficient coverage
People think that group life insurance offered by the employer is sufficient and this is somewhat true but the employee should also know that he/she is only covered till he/she is employed. The employee is not considered covered under life insurance policy if he/she decides to leave the company. Though life insurance cover from the employer is not always sufficient so it is advised to opt for a seperate life insurance plan that provides sufficient financial protection in case of an unforeseen event.
We can surely agree that life insurance is a complex and tricky concept to understand but we can surely agree that before making a decision of not buying a life insurance plan can be avoided by thoroughly going through the myths and facts that clear the misconceptions. It is now very easy to compare life insurance plans online and to make an informed decision for purchasing a life insurance plan. It is said to avoid relying on any kind of myths rather carefully research and rely on life insurance facts while purchasing a new life insurance plan.