Planning for emergencies is an integral part of the financial planning. But the most crucial thing is to buy a term plan that secures the family in one’s absence. However, there are many myths surrounding a life insurance policy. Below are a few.
- Life Insurance Is For Tax Saving: Tax saving benefit is one of the many benefits of the life insurance policy. The main purpose of life insurance is to protect the family from the contingency that could arise due to the untimely death of the policyholder. Premiums towards a life insurance policy are paid to cover the full financial needs of the dependants of the breadwinner. So the cover should be around 7 to 10 times more than one’s annual income.
- It Is Not For Very Young people: One may not foresee an unexpected death, but it may be wise to cover the risk of death. This way we do not leave financial dependants in bereft in case of an untimely death. Moreover, younger people also have the benefit of the lower premium rates. And the chances of the rejection are more when old, due to ill health.
- Term Policy Is A Waste Of Money: Life insurance is an investment that offers financial security to the policyholder’s dependents. It is the cheapest way to secure the family even during the unexpected or unforeseen events.
It is important to select the best term plan that ideally takes care of the family’s living expenses when the policyholder dies. Below are some important points to learn before opting the best term plan.
- A life insurance policy comes only with the death benefit and not maturity benefits.
- The family gets lump sum from the insurance company if the policyholder dies during the agreed term.
- Plan bought when young offers maximum benefit with little premiums.
- A thorough research is needed before picking the suitable term plan from the market.
In conclusion, it is very important to secure your family and avoid them suffer financial repercussions upon your death. However, you need to continue building assets and planning for investments. Do the right investments to get the maximum benefit