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In India, life insurance penetration is very low when compared to the developed world, although the need for life insurance in the Indian context is even more. This article takes a look at why the need for life insurance is greater in India and focuses on the myths that prevent people from buying life insurance.
The three crucial parameters that dictate the requirement of a life insurance Policy are:
1.Your cumulative savings at a particular point of time,
2.The ratio of dependents to the earning member in the family,
3.Responsibilities and Liabilities.
The most popular myth that prevails in India is that only the earning member of the family should be insured. Let us try to get over this myth by taking into account a very practical situation. In case of an unfortunate early demise of a housewife, we would very well realize that the cost of insurance premiums that we would have been paying would have been far less than the cost of outsourcing your daily household chores to a professional, which were otherwise handled by your wife. The cost of daycare centers, full-time servant and tuitions for your kids would almost stretch you beyond your means.
The second myth about not buying insurance is that “I am young and healthy now and I am better off investing my own money and my accumulated savings would be enough to meet the demand of my family that would arise in case of my death.” Surrounded by this myth, many people tend to overlook the risks and do not accept that life is uncertain and an unfortunate event can happen anytime, not giving us enough time to build a fortune, which you otherwise were very confident about. Hence unless you have a fortune now, do not postpone buying insurance cover. While you buy life insurance when you are young, you might as well save on the cost of your insurance premiums.
The third myth for not buying a life cover is that these are expensive. Remember that if you do not have enough savings to invest in an investment cum insurance plan, there are also Term life insurance plan, which are surprisingly affordable. You can choose between the length of Coverage and the sum Assured to get a plan that suits your budget.
The fourth myth being that my children are independent now and we do not need a life insurance plan. Always remember that financial independence is very crucial at all stages of life and one would not like his / her spouse to be dependent on anyone if he or she passes away.
This is another myth that prevents people from buying life insurance. However, the truth is that if you are making a legitimate Claim and if you have all the necessary papers in place, you can very easily get claims.