14 Most Common Myths about Term Life Insurance

Busting 14 Term Life Insurance Myths That You Shouldn’t Believe

Why Research is Crucial Before Buying Term Insurance?

Common Challenges & Solutions When Buying Term Insurance

FAQs about Term Life Insurance Myths

Can I buy term insurance for my spouse or children?

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Yes, most insurance companies do allow you to purchase term insurance for your spouse. Although you don't usually buy term insurance for children, some policies do offer family coverage for children.

What are the problems with term insurance?

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Some of the common complaints include the fact that there is no return and the short coverage period. This is all taken care of by choosing the right riders and researching the right plans.

Is term insurance really useful?

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Yes, term insurance is probably one of the most effective means of providing protection in monetary terms to the dependents at the cheapest rate.

What happens if term insurance is not claimed?

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The money is paid out only if the policyholder survives the term. In a few policies, though, there are return-of-premium options, where the premiums are returned at the end of the policy term.

Does term insurance actually pay out?

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If the policyholder dies during the term of the insurance policy, the amount assured is paid by the insurance company to the nominee. Of course, do select a high claim settlement ratio insurer to ensure prompt settlement.

Is it wise to buy term life insurance?

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Buying term life insurance is an affordable and effective way to ensure that the financial future of your family is secured in the event of your untimely death.

Do we get money back in term insurance?

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Term insurance generally does not offer maturity benefits. However, there are a few plans, such as Term Return of Premium (TROP) policies, that return the premium if the insured survives the term.

Do I need a high sum insured if I smoke occasionally?

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Irrespective of whether you smoke regularly or occasionally, it is ideal to disclose this information to the insurer.

Disclaimer

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  • This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
  • All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
  • Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.

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14-03-2025

Life Insurers See 5.7% Premium Growth: April-Feb Report

In February, life-insurance companies saw an 11.6% drop in new business premiums (NBP) due to a 22% decline in premiums from state-owned LIC. However, from April to February FY25, overall premiums grew by 5.71% to Rs 3.35 trillion. LIC's premiums increased by 1.90% to Rs 1.90 trillion, while private insurers saw an 11.11% growth, reaching Rs 1.46 trillion.

04-03-2025

Life Insurance Agents Surge: 3 Million in 2025

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19-02-2025

Life Insurance: FDI Boosts Growth Potential | 2025 Update

The Indian life insurance sector is set to grow significantly with the government's decision to raise the Foreign Direct Investment (FDI) limit to 100%. This move will provide the necessary capital for industry expansion, allowing insurers to increase mortality coverage and market penetration. Private insurers have already seen a notable rise in retail sum assured, outpacing new business premiums. The shift to unit-linked investment plans (ULIPs) may pressure margins, but increased capital inflows will help meet the growing demand for coverage.

12-02-2025

Budget 2025 Brings Changes to ULIP Taxation

The Union Budget 2025 has redefined the taxation landscape for Unit Linked Insurance Policies (ULIPs). Starting April 1, 2026, ULIPs with annual premiums exceeding ₹2.5 lakh will be classified as capital assets, subjecting their gains to capital gains tax rather than treating them as income from other sources. This amendment aims to align ULIP taxation with other equity-oriented investments, ensuring a uniform tax treatment across financial products. Policyholders are advised to reassess their investment strategies in light of these changes to optimize their tax liabilities.

02-02-2025

New Tax Rules for Life Insurance Premium

Starting April 1, new income tax rules will impact ULIPs and other life insurance policies with premims over 5 lakh will no longer enjoy tax-free maturity benefits under Section 10(10D). This move aims to align insurance with genuine risk coverage rather than high ticket investments. Smart investors might now explore alternate tax-saving strategies!

13-12-2024

Retail Inflation Drops to 5.5% in November

India's retail inflation eased to 5.5% in November from a 14-month high, due to moderating food prices. Industrial output increased modestly by 3.5% in October. Despite the slowdown in food inflation, vegetable and edible oil prices remain high. Experts anticipate a potential rate cut in February if the trend continues. Monitoring urban demand is essential, though rural demand shows improvement, aiding agricultural production.

12-12-2024

Policyholders Now Get Increased Surrender Value

The new business premium of life insurers was Rs 377,960 crore in the fiscal year ending March 2024. Starting October 1, policyholders will receive higher refunds if they discontinue their policies, as per new IRDAI regulations. This change may lead to increased premiums, impacting insurers' margins. Policies must comply with the new surrender value norms by September 30. Despite initial opposition, the changes aim to improve customer benefits and are expected to positively impact the insurance industry over time.

10-12-2024

Premium Costs for Life Insurance Decrease in November

In November 2024, new business premiums (NBP) of life insurance companies fell by 4.5% year on year (YoY) to Rs 25,306.56 crore, mainly due to a 27.17% drop in LIC's premiums. However, private insurers saw a 30.84% YoY growth in NBP to Rs 13,555.45 crore. Revised surrender value norms, effective October 1, led to enhanced special surrender values for policyholders. Despite the overall decline, private sector growth improved, cushioning the fall. The life insurance industry saw a 15.7% YoY growth in NBP during April–November 2024.

18-11-2024

Govt's FDI Plan: New Insurance Rules

The government plans to allow 100% foreign ownership of insurance businesses, attracting international companies. This proposed legislation also lets individual insurance agents offer policies from multiple companies. The changes are part of the Insurance Amendment Bill, set for introduction in the winter session of Parliament. These measures aim to increase insurance penetration, currently at 4%, by allowing more companies to underwrite policies and enabling agents to sell various covers.

08-11-2024

Record Growth: Life Insurers Boost Premiums 18.56%

The Life Insurance Council reported a 13.16% year-over-year growth in October 2024 New Business Premiums (NBPs), reaching ₹30347.6 Crs, up from ₹26819.01 Crs in October 2023. Year-to-date (YTD) collections also increased by 18.56%, from ₹185195.81 Crs to ₹219561.64 Crs. This growth is attributed to life insurers' focus on first-time buyers. Despite this, new policy issuances dropped by 41.6%. Individual single premiums grew by 8.60%, with overall YTD growth at 14.16%.

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