Myth 1. Life Insurance is only for tax savings.

Payout from life insurance will also cover monetary needs of the dependents. It also acts as a corpus for many future financial goals.

Myth 2. Life insurance is useful only after the policyholder’s death.

Life insurance is a risk management tool.
Living too long is also a risk. If you stop working at 60 and live till 90, how would you manage your expenses?
a. Building a corpus makes you financially independent during retirement, cover exorbitant medical expenses, or build wealth.
b. Insurance can help you secure your financial future.
c. Benefit from a timely investment in the right insurance product

Myth 3. Young and Healthy people do not need life insurance.

Life is full of uncertainties. The best time to buy a policy is at a younger age when you start earning. This way, you can get high coverage at lower premium.

Myth 4. Only financially well-off people can afford life insurance.

One can start with lower sum assured and then increase cover later – as income increases. Typically, term insurance provides large sum assured for a lower premium.

Myth 5. Insurance cover from the employer is sufficient.

Your employer covers you only till you are employed with the company. The policy gets terminated once you leave or retire. If the organization has financial upheavals, they may even cancel the policy or reduce the benefits. In which case, you will be stranded when you need insurance cover the most.

Myth 6: I Will Get Better Returns From Investments Other Than Life Insurance

Life Insurance products offer multiple features like
a) Mortality risks,
b) Morbidity risks,
c) Longevity risks,
d) Guaranteed returns,
e) Market-linked returns,
f) Whole life cover
g) All proceeds are Tax Free
So, the comparison of standalone features may not give the customer clarity and a holistic perspective.

Myth 7: ULIP is Not a Good Investment as the Costs are High

Fact: ULIP offers the dual benefit of protection and wealth creation in the long run.
ULIP offers flexibility and customization. You can easily switch between debt and equity funds within the same policy without any tax implications. ULIP also allows tax-free partial cash withdrawal for exigencies post the lock-in period.

Myth 8: The Policy Can Only Be In the Name of the Person Who Buys It

Anyone with a regular source of income and who is not a minor can buy a policy, either in their own name or in the names of their spouse or children. Some insurers offer a joint insurance policy to cover both spouses under a single policy.
Parents can invest in a child plan to protect their children’s future needs. In case the child is a minor, once he/she attains the age of 18 years, the policy vests in the name of the child.

Myth 9: Claim Settlement is a Hassle and the Insurance Company Can Deny the Payout or Hold a Portion Back

An insurance company will pay claims on policies in existence. That is the fundamental purpose of the company. In this context, it is important to remember that the Insurance policy is a contract of utmost good faith. So, the policy is only as valid as the information provided by the customer. Additionally, the premiums need to be paid regularly to keep the policy valid.
The policy payout includes all types of death – illness, accident, old age, war, riots, natural disasters (like floods, earthquakes), except death by suicide during the 1st policy year.