5 Term Insurance Myths Busted

Posted by Shaheen Shaikh on June 16th, 2021

Among all the life insurance products available in the market, term insurance is one of the simplest. Although the popularity of term insurance plans has been increasing over the years, there are many misconceptions.

We debunk five common myths about this plans that you may find on the internet.

Myth 1: You do not need a term plan if you are single

Reality: When you are single, you may have a home loan, an auto loan or a personal loan in your name. In case of your demise, the burden of the unpaid loan can get transferred to your family. This can cause them undue stress, especially if you are the only earning member. The death benefit from term insurance can help pay off such loans. Hence, whether you are married or single, this particular insurance is important.

Myth 2: Term plans are expensive

Reality: Term insurance plans offer significant life coverage for comparatively lower premiums than other life insurance policies. Typically, traditional life insurance policies like endowment plans, money-back policies and ULIPs, among others charge around 10% of the total coverage as premiums. Also, this plan offers a higher sum assured in case of the life assured’s death in the policy tenure.

Myth 3: You do not need term insurance if your company has a group life insurance

Reality: Employers often provide life cover to their employees as a part of group insurance coverage. However, the coverage amount can be quite less. It may not be sufficient for your family to meet their life needs. Also, if you switch jobs, what if the next company does not offer insurance coverage? Another thing you need to keep in mind is what may happen if you were to lose the job, or had to retire prematurely. Hence, it is advisable to have a term insurance policy of your own.

Myth 4: Buying a term insurance plan is time-consuming

Reality: Previously you may have had to visit a branch or fill out a form that the insurance agent used to provide. However, it is no longer the case. You can check the features, choose a plan, and purchase it with a few clicks. For instance, take the SBI Life Term plans. You can browse through the products listed on the website and shortlist plans that you may like. You can then check the premiums you have to pay using the particular plan’s term insurance premium calculator. Once you have decided, you can purchase the plan online with a few clicks. Thus, getting a term insurance plan is convenient and hassle-free.

Myth 5: Term insurance plan claims often get rejected

Reality: As per the IRDA’s claim settlement report, the claim settlement ratio of LIC was 96.69%, and that of the private insurance companies was 97.18% in 2019-20. Thus, the repudiations or claim rejection amounted to about a mere 2-3% in either of the cases. Hence, you should not be misled by this myth.

A term insurance plan gives you considerable life coverage for affordable premiums. Also, these products have become more refined over the years; and are on par with whole life insurance plans. Hence, do not fall prey to false information, and get this plan today.