Disparaging Common Myths about Term Insurance Plans

In real time term insurance plans are flexible, cost-effective, and quite simple to understand as they are not a constituent of a return value plan. Due to numerous myths centred on term insurance people have dicy opinions and give a second thought while purchasing them. In this thread we will shed some light and demystify these common myths about term insurance plans. 

No return value 

We’ll start off with the most popular myth i.e. term insurance plans come with no maturity benefit and therefore aren’t worth buying. People usually believe that term insurance plans are equally expensive as other insurance products and have no maturity benefit associated with them. However, term insurance plans are always less costly than other insurance products since the payable premium is very less when compared to other insurance plans. There are several term insurance plans that offer return and are called money back policies. 

Term Insurance Plans Benefit only in case of Demise of the Insured 

As convention, normal term insurance plans provide death benefit in the form of a lump sum that supports the family members and loved ones of the insured during the phases of financial instability. Term insurance providers offer auxiliary riders like terminal/ critical illness coverage, permanent or total disability benefit, personal accidental coverage. These riders are available at a nominal price and enhance the overall protection quotient of the plan which eventually benefits the insured and their loved ones apart from the demise of the policyholder. 

To understand this common myth let’s consider an exemplary situation. Suppose Mr. Makhoomi purchased a term insurance plan with a sum assured of AED 1 million along with an additional critical illness rider worth AED 50000. In case of the demise of Mr. Makhdoomi due to critical illnesses his nominee will be eligible for receiving AED 150000 as a death benefit.

Singles don’t need Term Insurance

A lot of people believe that there is no relevance of buying a term insurance plan if somebody is single. It is equally important for singles to get themselves a term insurance as it is for people with families. In case the policyholder passes away with an outstanding loan the family members of the insured party are liable to clear the debt on behalf of the debtor. The condition becomes extremely stressful for the family members if the passed away insured was the sole breadwinner. 

Buying a term insurance plan not only offers financial cushioning to your family members but also helps to repay the outstanding debts which eventually lifts off a huge burden over the shoulders of the family members. Furthermore, it is a well-known fact that with the payable premium and the age of the applicant are proportional to each other. If you are single as of now, in the future you will get married and have family. If you buy term insurance that time, you’ll have to pay much more in comparison to what you’ll pay at the moment.

Corporate Term Coverage is enough

Majority of companies and firms provide term insurance coverage to their employees in order to mitigate the various risk that might come across. However, one should realize that corporate term insurance plans are only valid till the time one is an active part of the organization. Once the employee leaves the company the corporate coverage is no longer valid and the individual is left no risk protection at all. The right approach to remain safe and secure is to always have personal term insurance under your name that will cover you even if you quit your job. A personal plan will not only help you to gain financial cushioning but will also provide peace of mind.

Online Term Insurance Plans do not provide Proper Claim settlement

The modern era is highly dependent on internet and most of the services are available online since it is quite convenient and user friendly. The insurance sector has also shifted towards online sales like the various other sectors. However, a common myth amongst a lot of people is that online term insurance plans do not provide proper claim settlement.

If you’ve filled all the documentation correctly and pay the premium on time there is no possibility of claim rejection by the provider. It is extremely important to get a detailed insight about the claim settlement of the provider to get an understanding about the background of the company. Online web aggregators are one of the most convenient and trustworthy medium of purchasing term insurance plans in the UAE.

Conclusion

Term insurance plans are integral risk protection tool that secures the future of one’s family and offers peace of mind. Term insurance plans are often ignored by people due to the common myths that we’ve tried to demystify today. Next time, you go out looking for term insurance plans don’t get tricked on any of the common myths.