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Debunking the 15 Most Common Myths About Term Insurance

Don't fall for these misconceptions about term insurance. Learn the truth and make informed decisions for your future.

Most Common Myths About Term Insurance

Home / Life Insurance / Term Insurance / Term Insurance Myths

15 most common myths about Term Insurance busted
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In India, term insurance has gained popularity as a reliable means to secure one's family's financial future in case of an unforeseen event. However, many myths and misconceptions surrounding term insurance have prevented people from availing of its benefits. In this article, we will debunk the top 15 Term Insurance myths in India and provide accurate information to help you make an informed decision.

What are the top 15 myths about Term Insurance Plans in India?
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Here are the top 15 myths about Term Insurance Plans in India.

Myth 1: Term Insurance is expensive
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Truth - Contrary to popular belief, term insurance is affordable and can fit within the budget of most individuals. Term Insurance is the most affordable. For example, a 30-year-old non-smoker can get a term plan with a sum assured of Rs 10 lakh for approximately less than Rs 500/- per month.

Moreover, Term Insurance Plans are customizable. Thus you can choose the policy term and coverage amount that best suits your needs and budget. This flexibility ensures that you only pay for the coverage they need, making term insurance a more affordable option than other life insurance plans.

Myth 2: Only young people should buy a Term Insurance Plan
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Truth - Financial obligations increase with age, as does the need for protection against unforeseen events like death or disability. If you're in your 50s or 60s and have done well for yourself financially, it makes sense to buy a term policy now rather than later when you may be older and more vulnerable to risk factors such as illness or injury that could prevent you from working again.

Myth 3: Only the primary breadwinner should buy a Term Plan
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Truth - "What if I'm a stay-at-home parent?" you might ask. Can I still get Term Insurance?" The answer is yes. Even if you are not the breadwinner and your spouse provides for the family, you will still need to cover your financial obligations in case they pass away.

It's often more important for a stay-at-home parent to have Term Insurance than someone who works outside of the home because they may not have any other source of income besides their partners'.

Myth 4: You don't need a Term Plan if you have savings
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Truth - Savings may not always be enough. You might have enough savings to cover your debts, but what if you don't? For example, what would happen if you take out a loan to buy a home and then lose your job or get sick and can't work anymore? Your family would have no way of paying off the loan. Or who will foot the bill if one of your loved ones gets into an accident and needs expensive medical care that isn't covered by insurance or government programs like PM-Jay and ESIS? Term Insurance protects against such unexpected events - and helps ensure that these types of situations won't become financially devastating for you or your family members.

Myth 5: Term Insurance Policies do not provide any benefits
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Truth - Many people believe that Term Insurance policies do not provide benefits other than death benefits. However, this is not true. Term Insurance policies can come with various riders or add-ons that offer additional coverage, such as Accidental Death Benefits, Critical Illness Cover, and Disability Cover. These riders can provide extra protection and peace of mind for you and your family.

Myth 6: Term Insurance Policies have a tedious claim process
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Truth - Another common myth about Term Insurance policies is that the claim process is lengthy and complicated. However, this is not true. Most insurance companies have simplified the claim process to ensure it is hassle-free and doesn't take much time. You need to submit the necessary documents, and the claim will be processed within a few days. Moreover, the IRDA has mandated that all insurance companies settle claims within 30 days of receiving all the necessary documents from the policyholder.

Myth 7: Term Insurance Policies Cannot be Purchased Online
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Truth - Many people believe that Term Insurance policies cannot be purchased online and must go through intermediaries such as agents or brokers. Most insurance companies now offer the option of buying Term Insurance policies online. Buying online is not only convenient, but it is also cost-effective as there are no intermediaries involved. Moreover, you can compare different plans and choose the one that best suits your needs and budget.

Myth 8: Term Insurance Policies are only for healthy people
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Truth - Many believe that Term Insurance policies are only for healthy people, and those with pre-existing medical conditions cannot get coverage. While it is true that insurance companies may charge higher premiums for people with pre-existing medical conditions, they cannot deny coverage. The insurance company may request additional medical reports or tests to evaluate the risk, but they cannot reject your application outright.

Myth 9: Term Insurance Policies are only for Short-Term coverage
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Truth - Another common myth about Term Insurance policies is that they are only suitable for short-term coverage. Term Insurance Policies can provide coverage for up to 30 or 40 years, depending on the policy. Moreover, some insurance companies offer term plans that can be renewed after the policy term expires. Term Insurance policies are a good option if you're looking for long-term coverage.

Myth 10: Term Insurance does not cover accidents
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Truth - Term insurance policies generally provide coverage for accidental death and natural causes of death, such as illness or disease. Most term insurance policies include accidental death and dismemberment riders that provide additional coverage in case of accidental death or injury.

Accidental death coverage typically provides a lump-sum benefit to your beneficiaries if you die due to an accident. Dismemberment coverage pays out a percentage of the death benefit if you lose a limb or suffer a permanent disability due to an accident.

Myth 11: Term Insurance is only for people with dependents
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Truth - Some people believe Term Insurance is only necessary if you have dependents like children or elderly parents. However, if you have any debt, such as a mortgage or student loan, Term Insurance can provide a safety net to ensure that your loved ones are not burdened with your debts if something happens to you.

Myth 12: Term Insurance is a waste of money
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Truth - One of the most persistent myths about Term Insurance is that living past your policy term is a waste of money. While it's true that you won't receive a payout if you survive the policy term, the peace of mind that comes with knowing that you have financial protection can be quite critical. Furthermore, some term policies have a Return of Premium option, so you can get your premiums back if you outlive the policy term.

Myth 13: Term Insurance is only for high-income earners
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Truth - Your income level does not determine the need for financial protection. If you have dependents or debts, Term Insurance can provide a crucial safety net regardless of your income.

Myth 14: Term Insurance is only for men
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Truth - While it's true that men are more likely to purchase Term Insurance than women, there's no reason why women shouldn't consider it as well. Women often have unique financial obligations, such as caregiving responsibilities, that make Term Insurance just as important for them as it is for men.

Myth 15: Term Insurance is only for those in dangerous professions
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Truth - Finally, some people believe Term Insurance is only necessary if you work in a dangerous profession like construction or firefighting. However, accidents and illnesses can happen to anyone at any time. Term Insurance can provide financial protection for your loved ones in case of unexpected events, regardless of your profession.

The ultimate truth about Term Insurance
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Here are some of the ultimate truths about term insurance in India.

Term Insurance is affordable
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Term insurance is the most affordable life insurance policy available in India. The premium for these plans is calculated based on your age, health, and term duration. If you purchase term insurance at a younger age, you can avail of a lower premium. Additionally, term insurance policies do not have any savings or investment components, which makes the premiums purely for providing life cover, making it more affordable.

Term Insurance provides comprehensive coverage
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Term insurance policies provide comprehensive coverage, including death due to natural causes, accidents, or illnesses. Some plans offer riders as well. Thus, your family can receive financial support in case of any unforeseen event.

Term Insurance is necessary for everyone
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Anyone who has financial dependents or outstanding debts should consider purchasing term insurance. Even if you are a homemaker, your contributions to the household are invaluable, and Term Insurance can provide financial support to your family in case of your unexpected demise.

Term Insurance is easy to purchase
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Gone are the days when buying life insurance was tedious and time-consuming. Nowadays, most insurance providers offer Term Insurance Policies online, making buying a policy quick and easy. Additionally, with the advent of digital payments, paying premiums has become hassle-free.

Frequently Asked Questions (FAQs)
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Here are some common questions about Term Insurance Plans in India.

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How do I choose the right term insurance policy?

To choose the right term insurance policy, you should consider your financial situation, your beneficiaries' needs, and the coverage options available. You should also compare policies from different insurance companies to find the best one for your needs and budget.

Can I renew my term insurance policy? 

Some term insurance policies can be renewed, while others cannot. If your policy is renewable, you can extend the coverage period by paying additional premiums.

How does my term insurance policy work if I outlive it? 

If you outlive your term insurance policy, you will not receive benefits. However, some insurance companies offer return of premium policies, which means you can get back the premiums you paid if you survive the policy term.

Can I cancel my term insurance policy? 

Yes, you can cancel your term insurance policy at any time during the policy term. However, you may incur a surrender charge, and the insurance company will refund the policy's cash value.

Can I change my term insurance coverage amount? 

Yes, you can change your Term Insurance coverage amount during the policy term. This is known as a rider or endorsement, which allows you to increase or decrease your coverage amount if allowed by the insurer.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.