Life insurance: Busting myths, one at a time

People find a variety of reasons not to take up a life insurance plan. "I’m young, so do I really need life insurance?" "Isn’t life insurance just another tax-saving instrument?" "Why waste money on life insurance?"

Most of these reasons are based on misconceptions or a lack of understanding about life insurance category as a whole. Hence users end up investing in the wrong life insurance plan.

Life insurance should be a well-thought out decision given that your family’s financial security depends on it. Besides, you spend your hard-earned money buying a life insurance policy. It is therefore essential to dust the cobwebs of myths and misconceptions that you have in your mind before buying a policy.

The rest of this article is dedicated to debunking some popular myths associated with life insurance.

Myth 1: Isn’t life insurance just a waste of money?Ill-informed people may keep telling you that life insurance will eat into your savings. However, this is incorrect. From securing your family financially in the event of loss of life to helping you meet expenses over the course of varying life stage needs, insurance is something that has multiple benefits.

Myth 2: Why buy insurance when I’m single?You maybe single and not have any dependents, but that does not mean you don’t buy life insurance. You can buy a money back plan which gives you returns at regular intervals or an endowment plan that gives you a lump sum after a specified term. Remember, being single does not eliminate health and post-retirement expenses.

Myth 3: Isn’t life insurance just another tax-saving instrument?This is perhaps the most common misconception that people harbour. Fact is that tax saving is just another benefit that comes along with a life insurance policy. The key objective of insurance is financial security. Once you have bought a policy that meets your financial objectives, you will be able to avail of the secondary benefit of tax savings.

Myth 4: I’m young, so do I really need life insurance?The earlier you factor in life insurance in your financial plan, the better it is. Insurance will help you meet expenses for many of life’s milestones like marriage, birth of a child, your child’s education and marriage and also for the golden period of your life – the post-retirement years.

An advantage of buying life insurance young is the low premium amount. As you grow older, that amount only increases.

Myth 5: Won’t insurance benefit my family only after my death?How life insurance benefits you and your family totally depends on the type of policy you buy. In a term insurance plan, the family gets the insurance amount upon event of loss of life. However, money back and endowment plans will help you build a corpus which you and your family can use during your lifetime. This way, buying a policy that fits your requirements will help you plan your finances better.

Take the right decisionMyths and misconceptions often cloud your judgment and come in the way of your decision-making abilities. It is important that you approach life insurance with clarity as it involves both, your money and the security of your family. This is where an insurance partner like Bharti AXA Life comes in. The company has a number of policies that meet your financial objectives. If protection of life is your priority, you can choose their online term insurance plan that is hassle-free and convenient. For payouts at specific intervals, you can opt for the monthly income plan. What’s more is that there is a dedicated claims handler to ensure a smooth claims process.

Buying life insurance is a critical part of financial planning. Don’t let prejudices and misconceptions influence your decisions. It is your money and you must spend it wisely.