7 Insurance myths that you shouldn’t fall for

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Reading Time: 4 minutes

Key Takeaways

  • There are several popular myths that one hears about insurance – such as only the rich can afford insurance, youngsters don’t need any insurance, getting insurance is cumbersome etc. None of this is true.
  • While it is encouraged that you buy insurance as a young person, it doesn’t mean you can’t buy them as you grow older. There are many companies that offer insurance plans for older people to purchase.
  • You need to compare insurance plans before buying one because all insurance companies do not provide the same plan.

Introduction

Who needs insurance? ‘Not me, surely!’ Why? ‘Pfft. I’m young and healthy and on the cusp of discovering my potential. I’m not going to die any time soon.’

This is just one of the myths you often hear about insurance – that young people do not need insurance. There are many such myths that often dissuade people from buying insurance every year. In this article, we’ll bust a few popular myths about insurance and introduce you to some facts.

You should purchase insurance when you are older

This is a false idea that many youngsters harbour. Just because the average life expectancy of human beings in India is 70, doesn’t mean you will be safe all your life. We don’t know what obstacles life can dish out. Insurance is a way of ensuring you are financially secure when unexpected twists are thrown your way.

Also, having your risk of death covered is definitely better than leaving your family financially unsecured in the event of your sudden death.

Moreover, youngsters are offered lower premium rates, which you must take advantage of. If you wait till you are much older, you might find it difficult to avail of insurance due to higher premium rates or poor health (in the case of life insurance).

Only rich people can afford insurance

Again, this is not true. Nowadays, there are several insurance plans that offer good coverage for reasonable premium amounts. All you need to do is research well online for customized insurance plans. There are plans available for every budget. What you can also do is start with a low sum assured and slowly scale up as your income increases.

Another important insurance is health insurance. Hospital charges are increasing every year and having a comprehensive plan will ensure that your finances do not get in the way of getting good healthcare.

Insurance covers provided by employers is enough

The thing with insurance provided by your employer is that you can avail of it only until you remain in service. If you happen to change your job or retire early, the insurance plan is terminated. Moreover, in case of your untimely death the insurance your employers provide may not be enough to sustain your family’s expenses financially. Buying an insurance policy privately can be more beneficial to you in the longer run.

Pro tip: Company coverage can also change year to year, and if you want to cover your dependents (especially your parents) then it makes more sense to opt for an independent policy. These also provide tax benefits under section 80.

Older people can’t buy insurance

While it is encouraged that you buy insurance as young as possible, it doesn’t mean you can’t buy them as you grow older. There are many companies that offer insurance plans for older people to purchase. There are health insurance plans that offer cover to senior citizens as well. There are retirement plans that give older people a certain income even after their salary stops coming in. It helps give them financial independence. In the case of life insurance, senior citizens can get whole insurance plans, with coverage for their entire life. This way, their family members will be taken care of in the event of their death. It definitely makes sense to buy insurance early on in life, but it is never really too late.

Getting insurance is troublesome

Well, it is troublesome and confusing only if you think so. As a beginner, things might seem out of grasp for you but don’t worry, that’s why you have insurance agents who explain to you what it is all about. Moreover, you have the internet at your fingertips, making everything easy, including buying insurance. You needn’t wait for your insurance agent, you can be your own agent and go check out different policies offered on different insurers’ websites.

Once you decide which insurance provider you want to go for, you have to answer a few questions online and upload your KYC documents and voila! You’ve bought an insurance plan from the comfort of your homes.

All insurance plans are the same

When you go to the mall to buy clothes, do you get the first thing off the rack? No. You check the price, the quality of the cloth, its durability etc. and then you make an informed choice. It is the same for insurance plans. There are numerous insurance providers in the market with many insurance plans available and it can be a real Sophie’s Choice in deciding which plan to pick.

You can get a financial planner or an insurance agent to help you out. Or, you can do your own research online and then pick the insurance plan most suited to your needs. At any cost, you need to compare insurance plans before buying one because all insurance companies do not provide the same plan. A Sabyasachi lehenga is different from a Dior gown, even though both are fancy designer clothes.

Other investments are better than insurance

It doesn’t make sense to compare insurance to other investment options because both serve two completely different functions. Insurance is not supposed to give you returns, it is not an investment product. Insurance is to keep you financially covered in case of an unexpected loss. It is for your financial protection. You can buy insurance plans and also invest your money in other ventures where you can earn passive income as well.

Conclusion

In short, get insured! At least, look up the facts about insurance before deciding whether or not you want to take it. Proper research can help you avert disasters and keep your boat afloat in trying times as well. That’s what insurance does. 

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