I remember my dad asking me why I wanted life insurance in his name. He went on to ask me – If I am expecting him to die soon. I realized how sentimental many of us are about the word life insurance. It has always been a very difficult decision to buy life insurance. It is not an easy subject to talk about as we are discussing what if the insured were to pass away. Imagine, you are asking the person to pay the insurance premium for something that he/she will not enjoy the benefits of.
I also remember during my financial services career, people asking, if I take a policy, what will I get in return over the policy term. The focus was never on protection. That is how the narrative has been for decades on Life Insurance. The myths associated with it have not helped the cause of financial protection.
It is about your loved ones and hence you cannot ignore the subject. “JOH FAMILY SE KARE PYAAR, WOH PROTECTION SE KAISE KARE INKAAR”
Myth I: I already have Life Insurance: I am sure you already have a life insurance policy. Ask yourself why did you buy the existing insurance policies – Because you wanted some tax savings products or a friend of yours told you to buy or you wanted to invest in the future or was it really for protecting the financial gap that may arise in your absence? Ask yourself in case of an unforeseen event, is your insurance good enough to fill the financial gap your absence will create? Your answers will answer you if you are already insured or not.
Myth II: What if nothing happens to me: If nothing happens to me, the premium I paid will be a waste so what’s the point of buying life insurance. Ask yourself the following: In case of your car insurance, if nothing happens to the car,
the end of the year are you happy or you regret paying the premium? The whole objective of Life Insurance is to protect from uncertainties. Be happy and celebrate if nothing has happened to you. However, in today’s world, some products will return the premium you paid if you survive the life insurance term. For example – I am 52, I paid a total premium of Rs.10 lakhs over 10 years and I am still alive after the expiry of the policy term of 85, the premium paid (Rs.10 lakhs) will be returned to me.
Myth III: I am still very young: Age is only one of the factors that should help you decide to buy Life Insurance. It is great news that you are young and reading this blog. How would you feel if you finish paying the premium by the age of 30/35 years and continue the benefits of coverage until the age of 85 years/100 years? Can you imagine the feeling of freedom from future payments for the rest of your life? To top it up, the premium that you will pay will be much lower compared to buying it when you are old. Let me share an example – Let us assume that you are 25 years of age and I am 52. We both would like to insure our life for 1 crore and cover the risk until the age of 100. The premium amount to be paid by you for the next 10 years (till the age of 35) is Rs.40600 + GST as compared to the premium of Rs.145500/- + GST to be paid by me. In 10 years you will pay a total sum of Rs.406000/- and I will pay Rs.1455000/-. Ask yourself – Which amount is easy to pay and whether between 25 years to 35 years of age, it is easy to pay or between 52 to 62 years.
Myth IV: I am single, I do not need it: There are many reasons for buying Life Insurance even if you are single. The most important reason is you may have aging parents or children or both and they are financially dependent on you. The second important reason could be that you have taken a loan. Would you like to pass the burden of your debt to your dependent parents of children? No one is saying you are dying now but a policy could mean no one else is burdened with loans in your absence.
Myth V: Life Insurance is expensive: One of the biggest myths surrounding Life Insurance is its cost. Most of the people think it is very expensive to buy financial protection. It is like saying mobile phones are expensive. Mobile phones that deliver basic functions are very cheap. It is only when we want frills that the cost goes up. Pure protection or Term insurance as it is more popularly called is the cheapest form of buying financial protection. For example, the premium for a 25-year-old, man, non-smoker for 85 years coverage is Rs.25900 per annum and you will have to pay only for 10 years. The cost is high when you mix investments with protection but then you are getting returns also even if you survive the term.
Myth VI: I have health issues so I will not get life insurance: Unless you are suffering from Life-threatening diseases or critical illness, you can get insurance. I have seen so many people suffering from Diabetes, BP, and High cholesterol, etc. getting policies. If your diseases are within the defined range, no issues but if they are outside the range, then a counteroffer will be made to you with a new premium amount.
Myth VII: I am already insured by my company: Group insurance under which your organization has covered you will be much smaller than the amount you should be insured for. In case of your death; the amount that your family will get would be lesser to meet their needs. What if you leave your job? The insurance policy is not moveable and will not travel with you everywhere.
Myth VIII: I am too old to get Life Insurance: The good news is that you can buy life insurance till the age of 70 years. As you grow old, your goals would be different and for a shorter term. You may choose a shorter premium payment term to say 5 years and cover till 85 years. For example, if you are 60 years of age, your premium for a sum assured of Rs.10000000/- covered till the age of 85 years would be Rs.183600/- to be paid for 5 years.
Myth IX: I don’t need life insurance once my children are adults or independent: Congratulations that your children are grown up now. But you will still need insurance to cover your debt if any, for leaving a legacy for children/ grandchildren. The extra money from parents/ grandparents will not do any harm to them.
Myth X: I am staying at home parent. I earn nothing so I do not need insurance: Do you know that as a home parent how important is your contribution and the entire house and the work in the house gets done smoothly because of you. The work that you do would cost lakhs of rupees every year if you were not there. Imagine you are leaving behind enough to meet the expenses of all the work that still needs to be done in your absence.
I hope the above will help you in making informed decisions and you will not shy away from buying financial protection for your loved ones.
Lokesh Nathany
Storyteller | Motivational Speaker | Trainer | Curator | Host | Financial Protection & Goals Champion | TEDx Speaker | Founder – My Innings | “Awarded 50 Most Innovative Storyteller of the year by World HRD Congress & World Storytelling Congress”
Mobile: 9052203070 and Email: lokesh@lokeshnathany.com
Disclaimer: The views expressed are absolutely personal and does not represent the views of any of the organizations I represent or am associated with.
