We often hear that term insurance is a must for every earning individual, especially when they are the sole breadwinners of their family.
Besides, in testing times like these, more and more families have felt the need for a financial cover as the onset of this pandemic has clearly shown everyone all over the world how important and equally expensive health and medicare can get!
If your end goal is to secure the financial future of your family in your absence, then term insurance will go a long way. However, there are many myths surrounding term insurance policies, their structure and fundamental idea.
Let’s take a look at some of these commonly heard myths and know what the reality behind them is.
Myth 1: Term Insurance Plans Are A Waste Of Money
Reality: During uncertain times like these, a financial cover is the need of the hour for every family. In case of your untimely death, there is a lot your family will have to deal with, ranging from financial liabilities and existing bills to expensive medical treatment and hospitalisation charges.
Not to forget, they also have to provide for themselves and look after the younger members of the family, which can get especially difficult if the deceased was the major contributor or the sole breadwinner of the family.
A term insurance policy helps the policyholder’s family with a lump sum upon their death, ensuring that the family is financially secure even in tough times.
Myth 2: Mos Of Best Term Insurance In India Are Costly And Have High Premiums
Reality: Term insurance plans are fairly flexible when it comes to deciding the premiums and customising the payment frequency as well.
You can actually decide on how much premium you wish to pay and get coverage accordingly. Besides, the younger you are when you apply for the term insurance policy, the lesser premium you pay for a higher coverage amount.
Myth 3: There Are Little To No Term Insurance Benefits Other Than A Death Cover
Reality: You can customise the best term insurance in India to gain maximum benefits by adding riders. Add-on Riders are optional for any insurance policy you buy but worth considering as they can be added for nominal value and will offer you a lot of added benefits.
Be it an accident disability cover, death benefit, critical illness cover, waiver of premium, income benefit cover or survivor cover, your term insurance benefits can be tailored to suit various needs.
Myth 4: Once You Buy Term Insurance, You Cannot Increase The Cover
Reality: Some insurers offer policyholders a chance to enhance their life cover when they cross major milestones of life like getting married, having kids, retiring from their job, etc. The guaranteed insurability rider basically ensures your insurability to extend your cover at different stages of life without needing another medical examination.
Myth 5: Term Plans Cannot Be Customised
Reality: There are, in fact, many ways to customise the best term insurance in Indiaas it is quite flexible. You can decide the coverage amount, the tenure you wish to pay your premiums for, and even the premium paying frequency.
Besides this, there are many add-on riders that you can add to make your policy solid and whole, which will ensure that you do not need other insurance policies to cover various health, disease, or accident aspects either.
With so many amazing riders up for grab at very nominal prices, you no longer need to worry about buying full-fledged health insurance when you already have term insurance.
Myth 6: Term Insurance Does Not Have Any Benefits For The Policyholder Itself
Reality: One of the biggest benefits that the policyholder gets throughout their policy term is the tax-saving benefit. Under section 80C of the Income Tax Act (1961), you can save up to Rs. 1,50,000 every year in taxes, according to the old taxation regime.
In addition, you can claim a tax deduction on the yearly premiums you pay towards your term insurance or towards the term policy bought for a dependent parent. There are other benefits also like a critical illness cover that covers various critical illnesses and helps the policyholder financially.
While there are many insurance companies out there with the best term insurance in Indiawith very similar benefits, it is important that you do your due diligence and go for the one that has the best of everything.
Remember to follow your checklist and compare insurance policies, their premium rates and frequency, calculate your income tax online to know how much benefit you can claim with insurance premiums, and compare the riders that different insurance providers offer.
A condition that applies to the tax benefits described above: the Section 80C deduction (a single ₹1,50,000 ceiling shared across EPF, PPF, ELSS, home-loan principal and insurance premiums) can be claimed only if you file under the old tax regime. They are not available under the new regime, which is now the default — so check which regime you are on before counting on these benefits. Tax rules change at Budget; confirm the current position for your assessment year before acting on it.
