NEW DELHI : Sometimes the decision to take out life insurance can make people anxious because they have a lot of doubts about it. Here are three myths and questions most buyers ask themselves to better understand life insurance.
Myth 1: Only breadwinners need life insurance
While it is true that life insurance is necessary for the person who earns the majority of the household income, it is also beneficial and safe to have life insurance that covers the spouse whether they are working or not.
See yourself as the breadwinner; if the stay-at-home parent died, how would you manage all ancillary expenses? There would be a sudden increase in household expenses for cleaning, cooking, childcare, and housekeeping. You may need to hire someone to clean and take care of the kids, which can be expensive. This is an insurable risk and housewives should purchase life insurance alongside the breadwinner. There are plans available in the market for people who wish to purchase joint life insurance policies that also cover their spouses.
Myth 2: My employer offers life insurance as a benefit, so I’m covered
While a policy can cover you, that doesn’t mean you own it. When you choose employer-provided insurance, your employer owns and controls the policy, not you. If your employer cancels or reduces benefits, or if you change jobs, you could end up without coverage or with insufficient coverage for your financial future.
Another factor to consider is the coverage. Some employers may offer life insurance, and while this is a valuable benefit, it may not provide you with all the coverage you need.
Sajja Praveen Chowdary, Head of Life Insurance, Policybazaar.com, explained: “Typically, your employer’s life insurance coverage is limited to 1-2 times your annual salary. The problem is, it doesn’t provide the full picture of your financial situation. If this amount is not enough to meet your family’s basic needs in the event of incapacity for work, purchasing a separate policy can give you and your family the much-needed peace of mind. . generally need at least 5 to 8 times your income, some experts recommend 10 to 12 times. “
Myth 3: I am young, single and in good health. i don’t need life insurance
It’s true that no one plans to die anytime soon or how it will affect their loved ones, but life insurance is a product you buy before you need it. Even if you are single and young with no dependents, it is possible to have liabilities. What if you have a student loan and something unfortunate happens? The burden of repaying your debts will fall on the guarantor of your loan.
Chowdary said one might think that insurance is unnecessary at these stages of life and can choose to forgo it. “While it can be tempting to put off buying life insurance until later in life, doing it at a younger age can help you save money in the long run. Because insurers calculate your premiums based on their likelihood of paying on the policy, purchasing insurance when you’re younger and healthy can dramatically lower the cost of your policy. The smart choice is to start your coverage when you are young and healthy, ”he said.
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