Term Insurance Demystified: Common Myths and Misconceptions

There are a variety of life insurance products available these days. One of the most simple, affordable, and important life insurance products is Term Insurance. It is a cost-effective insurance option that provides financial coverage for a certain period to the policyholder. In the event of the untimely death of the policyholder, the benefits are paid to the beneficiary of the insurance. Though a popular product, there are a few myths about term insurance that are about to get busted in this article.

Myth 1: "Term Insurance is a Waste of Money, as There's No Payout”

Truth: The main purpose of this insurance is to offer financial protection to the insured’s loved ones and help them manage their expenses in case of the untimely death of the insured during the term.

Myth 2: "Term Insurance is Only for the Young and Healthy”

Truth:  Term insurance coverage cannot be denied to those with pre-existing medical issues. Term insurance is beneficial for individuals of all ages, irrespective of their health conditions.

Myth 3: "Term Insurance is Expensive Compared to Other Types of Insurance"

Truth: On the contrary, this product is known for being cost-effective and affordable. In contrast to other life insurance policies, term insurance offers significant coverage for low premiums.

Myth 4: "Term Insurance Doesn't Provide Any Benefits Besides Death Benefit”

Truth: These policies also offer add-ons (riders) such as Critical Illness Cover and Accidental Death Benefits that offer additional security.

Federal Bank understands the requirements of its customers and its My Life Protection Plan offers an extensive cover for a relatively low premium. The insured can also opt for the accidental death benefit. 

Myth 5: "It's Better to Invest Money Than Pay for Term Insurance Premiums”

Truth: Just like investing is vital to secure one’s future, term insurance policies are essential to protect the financial future of loved ones in case of unforeseen events. 

Myth 6: "I Have Insurance Coverage through My Employer, I Don't Need Term Insurance”

Truth: Though an employer offers insurance coverage to the employee and his/her dependents, it is important to check the coverage and the benefits offered. Additionally, the impact of a job change must be considered. It is advised to opt for term insurance despite having a company group insurance cover.

Myth 7: "Renewing Term Insurance is Too Complicated and Costly”

Truth: Term insurance renewals are quite straightforward and the insured need not go through a medical exam or give any extra information again.

Myth 8: "Term Insurance is Only for Breadwinners, Not Homemakers”

Truth: A homemaker's role in a family is often undervalued in contrast to that of the breadwinner. One must consider that in the event of the untimely demise of a homemaker spouse, how would the other partner care for the children and their education, and manage other requirements? One would have to hire caretakers and maids to get the activities done, which could be expensive.

Myth 9: "I'm Young and Healthy, I Can Delay Buying Term Insurance"

Truth: One has to grow old someday and health issues do not come with a warning. The best time to secure the future of loved ones is to get term insurance at an early age to benefit from good coverage and low premiums.

Myth 10: "Term Insurance is Not Suitable for Single Individuals”

Truth: Term insurance is best purchased early, as the premium would be lower. Irrespective of whether one is single or married, term insurance is a way to ensure one’s liabilities do not become a burden on others in the future. 

Conclusion

Though an affordable and simple product, term insurance has constantly faced the brunt of misconceptions. One needs to understand the benefits a term insurance can provide, to take a well-informed decision to safeguard the financial future of their loved ones.