A life insurance policy is a contract between the insured and the life insurance company. It is obtained to support family members in case of the policy holder’s death. In case of death or critical illness of the policy holder, the policy proceeds kick in, which can be used to meet various family needs.
There are several myths about life insurance including:
1. Life insurance is a must
This is one of the myths about life insurance. Life insurance can be avoided if you don't have dependents or if the remaining family members are financially strong enough to take care of their monetary needs.
2. Insurance costs less if purchased online or directly from the company
This is another myth about life insurance. While it is logical to think that insurance could cost less if agents are bypassed, there are several other aspects or needs to consider. Most agents are aware of insurance regulations, insurance changes, coverage, deductibles, co-payments, and most other problems or challenges faced by policy holders. Insurance agents can actually help you buy a good policy at a much lower cost than that available on the Internet.
3. If your health is poor, you can't get life insurance
Although some companies may deny a policy on account of poor health, many others do offer policies at a higher premium. So, it is possible to get life insurance coverage by a person in poor health.
4. Life insurance is useful only if you have an income
This is one of the most common myths about life insurance. Life insurance proceeds help by replacing the income that was otherwise contributed by the policy holder when alive. However, this does not mean that a homemaker does not need life insurance. Home making efforts, child care, or taking care of an ill family member are some of the tasks that need to be replaced in the event of the death of a home maker. These tasks can cost thousands of dollars per month and are counted as income at the time of purchasing insurance.
5. Life insurance is a good investment option with high returns
There are several term life and whole life policies that offer growth of capital. However, investment and insurance are two different things. If one has an investment objective, financial instruments provide higher returns and growth of capital compared to a life insurance policy.
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