A majority of the population have second thoughts or no inclination towards owning a policy as they have a justification for not having one which could be unreasonable at times. People have defences like “ I am in the pink of my health, why do I need insurance?” or “ I have no dependents. I am better off without an insurance policy.”
These are nothing but illusions that hold you back from buying an insurance policy. Whether you are young or not or if you have dependents on you or not, insurance is an essential and not an indulgence. It is important to secure yourself and all these justifications are nothing but myths and we will be debunking some of the most common and irrational myths.
10 of the Most Stereotypical Myths about Insurance
Let us clear the air around having an insurance policy and why do you need to have one. We shall look at each myth one by one and debunk the theories behind it so you realise how important it is to purchase an insurance policy.
A Term Insurance charges exorbitant prices and it is to be possessed by the rich only.
Fact: This is totally inaccurate. If you buy term insurance, you have a benefit of getting covered better as a term insurance cover has an excessive inclusion as compared to other insurance byproducts the insurer has to propose.
If you purchase one or two insurance policies or even extensions to your current policies, you will end up paying higher premiums as compared to having a single term insurance policy that has good coverage and is mostly an all in one plan. You will never make the wrong choice if you own a term life insurance and it is not a luxury for only the rich to own.
A Life insurance policy is not necessary if I am in the prime of my youth.
Fact: Humans are fragile beings and life is erratic. What will happen when cannot be predicted and when disastrous events could occur is only one’s guess. You need to realise that you leave behind folks who are entirely reliant on you. Instances of young adults passing in an accident are common instances these days and we need to know better. It is not just us who we have to think about but our folks who will end in dire states without us.
My death will only reap the benefits of insurance and provides me with no utility.
Fact: This is the most prevalent myth across the board. Life insurance policies are not just limited to payouts after death but there is a huge array of insurance components to choose from. It depends upon what your plan is when you buy an insurance policy. If your ultimate goal is full coverage then a term insurance policy is best suited for you.
If you have other plans such as having a nest egg for the future you can opt for endowment plans or ULIP plans. There is a range of policies to choose from and is not just limited to claim recovery after death.
I do not consider having a life insurance policy as a necessity because I have no dependents.
Fact: It is a silly assumption that you do not require life insurance just because you are a bachelor or spinster and have no mouth to feed so it will not cause any harm if you are not insured. As time passes we will lose our youth and will, unfortunately, advance in age and we need some kind of security to aid ourselves. It is not totally unnecessary to have an insurance policy and we need to safeguard our needs for the future with the help of insurance.
Procuring a Life insurance policy is tedious.
Fact: We often procrastinate and end up not buying insurance just because we feel that it is not worth the effort to go all the way to the insurance company and requires a ton of documentation. In this day and age where technology is booming like never before you can buy an insurance policy at the click of a button and you will have to produce some basic documents and information like your age, weight, height, address proof and so on. You can also lookup the internet to get assistance on how to apply for insurance online. Once all this is sorted, the best plan for you will be made available.
Insurance is important to the provider of the household
Fact: Needless to say, the provider of the household definitely needs to be insured but it is smart to ensure your companion as well, whether or not they are employed. This is because it could happen that the partner that takes care of the house may encounter an unfortunate incident and the entire burden of running the household and doing the job of two have to be copied by you. So, when you are not alive, will there be any financial repercussion? If yes, then you need life insurance.
A Term insurance claim is generally rejected
Fact: It is a notion that most term insurance claims get rejected even after you have diligently paid your premium and never failed to become late even once. If my family is not able to reap the benefits, what good is such insurance? The IRDA’s annual summary has revealed that the death claim percentage varies between 85.3 - 99.07 which is a meagre 15 rejection per 100 policies and those rejections too have certain legitimate reasons.
So, if you disclose all relevant and material information at the time of your policy inception, there is no way your claim can be rejected, if the need arises.
Buying another Insurance policy is impractical as my association has a group life insurance policy for its employees
Fact: Granted that your employer has got you covered with a group life insurance and you do not need to worry about buying another policy. However, we fail to take into consideration that the amount of the group insurance is just basic and it would barely cover the expenses of the family you will leave behind which end up your family in dire states and that is something you are probably not aiming for.
What if you leave your job or your company chooses not to renew your life insurance plan? In such cases, your life insurance coverage ceases to exist. Hence opting for an individual life insurance plan is quite important so that it supports your near and dear ones, especially if they are financially dependent on you.
I am secured because I have insured myself way back in time
Fact: It is very responsible of you to have purchased insurance in the past. That does not mean that you do not require some modifications in your policy because the policy that you purchased such a long time ago will not necessarily fulfil all your needs and demands in the future as expenditures have skyrocketed and a minimum cover would not benefit you in the long run.
Ploughing money into an asset could prove to be more beneficial as compared to insurance
Fact: It could be a major risk harping on your investment that could prove to be worthless in the future. For instance, you have invested in shares in a well-known company and are certain that it would gain you good profits. As the nature of stocks is to fluctuate, you can never be sure that it would be of any use to you. You may possibly purchase a piece of land as it is the best asset to have but what if this piece of land depreciates instead? Then there would be no return from there and the most logical decision, in that case, would be ensuring and keeping yourself secure.
There is no comparison between insurance and investment and the two should never be used as comparison products.
It is common human behaviour to be sceptical about investing our money as it involves major risks but purchasing insurance policies could be one of the safest means of investment that ensures coverage and security and it would be the wisest decision that you would make for the welfare of yourself and your family.