The Most Common Term Insurance Myths Explained
Term Insurance is easy to understand and affordable. It offers a large sum assured at a relatively low premium.
During a business tour, 28-year old Shashank happened to meet his friend Sanjay (35), who was married and blessed with two children. Shashank’s work involved extensive traveling, and so he was always busy. That day after the conference was one of the rare occasions, when he had some time to sit and interact with his friend over coffee.
As they sat together and talked, the topic of discussion soon turned into personal finance, when Shashank mentioned that he had bought a term insurance plan at the age of 25. Sanjay was surprised at this, because he thought Shashank was too young to buy insurance.
Sanjay: I have heard about term insurance, though I don’t know much about it. And, how did you end up buying a term plan at just 25? Isn’t that too early to avail life insurance?
Shashank: Well, when it comes to life insurance, sooner is better. In case of a term plan too, the earlier you buy, the lesser premium you’d have to pay. The most appealing thing about term insurance is that it offers you a substantially large cover, at a premium which is comparatively lower than other policy types. For example, Max Life’s new Online Term Plan Plus offers a 28 year old non-smoker a cover of Rs. 1 crore at a monthly premium of Rs 563. Moreover, this premium remains the same throughout the policy term.
So, as soon as I had begun my professional career, I created a financial plan, and realized that it made sense to invest in a term plan. Anyway, my responsibilities are only going to increase in the future. That’s why I think having a term plan would help me secure my assets. In case I die early, it will help my family maintain their standard of living without having to compromise on the important milestones. Therefore, it’s never too early to buy term insurance.
Sanjay: I see. If I look to avail a term plan today, at my age, will it be a good idea?
Shashank: Sure it would. Even at the age of 40, you can avail a term plan that gives a cover of Rs. 50 lakhs, at an annual premium of Rs. 10,000 to Rs. 12,000. Like I said before, the older you get the bigger your financial responsibilities. So, a term plan is a good idea to protect your family’s financial future, no matter what age you choose to buy it at.
Sanjay: Alright. But if I know correctly, a term plan does not give any benefit if the insured survives the policy term. Will it not be a waste of all the money?
Shashank: Well, yes that’s true. But that’s not a reason to avoid buying it. Since term insurance plans offer only a death benefit, most people don’t see the value. However, if you do the math, you realize that the premiums are a small prize to pay for the peace of mind you get, when you know that your loved ones will be taken care of (financially) even in your absence. Besides, in case of a claim, the sum assured received is so many times greater than the premiums paid.
Sanjay: Okay. So how should I go about buying term insurance? Isn’t availing term insurance a cumbersome process?
Shashank: No, not at all. In fact, buying a term plan online is the easiest and smartest way of buying life insurance. The process is fast and also cost-effective. Choose your sum assured depending on your requirements and future financial goals. Once you’ve done that just calculate insurance premium online, get the quotes, and pay. Ensure you provide complete and authentic information to your insurer. Providing misleading or incorrect details about your health or finances can lead to a claim rejection.
Additionally, the cost of premium is lower when you buy online!
Sanjay: Okay, got it! Another question though! ls life insurance money taxable?
Shashank: No, actually it isn’t!, The premiums paid and the death benefit proceeds, received by a beneficiary of a term insurance plan are not liable to income tax. Similarly, bonuses and dividends (if any) are also not taxable.
Sanjay: Great. Thanks for telling me about term insurance and its benefits. I will definitely get a policy soon.
Shashank: Sure, you don’t have to wait though. Now-a-days you can buy insurance on your mobile phone as well. Try this link now to get a free quote in seconds!
A term insurance plan goes a long way in securing the financial future of your family. Availing term insurance is simple and is a key component of any financial plan. Start by getting a quick quote today.