5 Most Common Myths about Life Insurance Myths

There are a lot of misconceptions and myths floating around when it comes to life insurance. Believing in such myths might influence us to make wrong financial decisions.

Hence, it is important to differentiate between authentic and incorrect information so that we can plan our personal finances and the well-being of our family efficiently. 

Let’s discuss and debunk some commonly known life insurance myths.

Myth 1: Life insurance is unnecessarily expensive

Fact: If you do proper and thorough research about the various life insurance policies available in the market, you will definitely be able to find a plan with affordable premium payments. Many insurers offer customisable plans with flexible payment options. 

These premiums depend on multiple factors and can be tailored to one's specific needs. Typically, the younger you are, the lower the premium rates. 

Also, here’s an insurance fun fact: you can start with low premiums and then increase the premiums and benefits as your income increases. This increases the affordability of life insurance policies.

Myth 2: I Don’t Need Life Insurance as I am Young and Healthy

Facts: Life is full of unpredictable incidents, and it has no regard for any age. Accidents do not offer any privilege to younger people. When you are young and have just started earning, it might be difficult for you to accumulate a large amount to provide financial coverage to your dependents. 

Additionally, the best time to purchase a life insurance policy is when you are young since you can avail policies with low premiums. This will help you take care of future family commitments or cover your superannuation expenses.  

Hence, you can always start with a small amount and then increase the premium and coverage as your income and liabilities increase. 

Myth 3: I Can Earn Higher Returns from Investments Other Than Life Insurance

Fact: A life insurance policy is a financial product. Similar to other investment options, it has its own range of features and benefits, the most important one being offering financial protection to your dependents in case of your untimely demise. 

Hence, the main goal behind opting for a life insurance policy shouldn’t be generating higher returns but securing the future of your family in your absence. 

Nevertheless, you should know that you can avail tax deductions on premium payments, and the death benefit of life insurance policies is fully tax-exempt as per IT Act. As a result, you can get considerably high risk-adjusted returns by investing in life insurance policies.

Myth 4: Insurance From My Employer Will Suffice 

Fact: The insurance cover provided by your employer is only applicable as long as you are an employee of that organisation. As soon as you leave the organisation, you will lose the benefits. Also, the cover may be sufficient when you are young and single but won't be enough when you have dependents. 

Apart from these, you cannot customise the insurance as per your requirements. For example, the insurance offered by your employer might only offer death benefits, but what about critical illness or disability benefits? This is why it is important to supplement your employer insurance with life insurance personalised as per your criteria.

Myth 5: Life Insurance Will Only be of Any Use After My Death 

Fact: Life insurance does provide death benefits to the beneficiaries of the policyholder. But this is not the only aspect you should consider while purchasing life insurance. 

Life insurance is a financial tool which shields you and your family from financial difficulties. While term life insurance takes care of your family in case of your unfortunate demise, a permanent life insurance offers financial protection for life. By helping you build a corpus for yourself, it also acts as a post-retirement fund.