There are plenty of common myths floating around about life insurance among the general public. This is one of the reasons why India has one of the lowest life insurance penetration in the world. Some of the common myths are listed as follows:
Life insurance is expensive.
This is one of the most common misconceptions about life insurance policies. The cost of life insurance depends upon the type of policy chosen. If you choose a term insurance policy, it can be extremely cheap compared to other plans. Also, the cost to benefit ratio in term plans is extremely high. By shelling out a small annual premium, you can get high-value coverage for your life. For instance, a 30-year old non-smoker male earning Rs.5 lakh per year can get for Rs.1 crore coverage for 25 years by selling out as little as Rs.7,500 per year. This comes around to a monthly spending of just Rs.630.
Life insurance is not required if you are single.
While the main purpose of life insurance is to provide financial security to your dependents, it can also serve other purposes. For instance, an individual has outstanding home loan of Rs.30 lakh and personal loan of Rs.5 lakh. He also has aged parents who are dependent on his income. In this scenario, a term cover of Rs.75 lakh can protect him against all the liabilities mentioned here. Also, he can leave the remaining coverage amount to his parents.
Employer-provided life insurance is sufficient for me.
Employer-provided life insurance has many limitations in terms of flexibility and coverage. The sum assured amount is usually very limited, and it may not be sufficient to sustain the financial stability of a family for life. For a person earning around Rs.6.5 lakh, the life cover will be around Rs.10 lakh. This is nowhere sufficient to take care of a family throughout life.
Stay-at-home parents do not need life insurance.
In a family, primary earners are the ones who mostly buy life insurance coverage. This does not mean that stay-at-home parents do not need any life insurance coverage. Stay-at-home parents are also vital part of a family. Losing them will cause a major impact on the proper functioning of a family. Hence, it is better to take coverage for stay-at-home parents also. You may also consider opting for joint life insurance which provides coverage for a married couple as a whole.
Listed above are some of the myths commonly associated with life insurance policies. It is worth noting that life insurance is a must for everyone irrespective of their profession or income. If you have dependents to care for, you must ensure that their future is secured with the help of life insurance.