Before you start your investment journey, you need to have proper insurance to ensure that your investment journey is not interrupted by unforeseen circumstances that can result in huge financial losses. Therefore, the basis of financial planning is to take out insurance to protect your investment.
“There are many myths about financial planning and life insurance choices, but it’s very difficult to understand what is true and what isn’t. People need insurance types and coverage. You may be trying to make a general estimate to make a decision and believe that you don’t need life insurance at all at some stage, but it’s important to know that there is no one-size-fits-all model for insurance. Aditya Anil Kumar Singh, Chief Insurance Actuarial Officer, Birla Sun Life Insurance Company Ltd, said:
“To find the right policy, it’s important to understand the truth behind some common misunderstandings about life insurance,” he added.
Shin cites six common misunderstandings about life insurance:
1. Life insurance is expensive
The cost of life insurance, often referred to as premium, depends on several factions, such as the insured’s age, current health, and existing medical conditions. Insurance premiums are inversely proportional to life expectancy. In other words, the shorter your life expectancy, or simply the older you are, the higher the cost of life insurance. Today, there are multiple options available for individuals to invest in life insurance. Policies can also be customized to suit individual needs and budgets. All of these will help you get the insurance you want with a comfortable premium. Most importantly, life insurance should be treated as a protective investment, not an expense. This is because the family can be confident that they will be taken care of in the event of an unfortunate death or other unforeseen event.
2. Not everyone, especially young people, need to have life insurance
It is a common myth that life insurance is not an essential financial product for young people. The main premise of life insurance is to provide financial security to the insured and their families, but it is also a product that you must purchase before you foresee a clear need. The right time to buy life insurance is when you are young and healthy. Delays can reduce your chances of getting insurance at the price you want. Insurance plans can be expensive due to poor health or unforeseen circumstances. It is important to start early and start wisely.
3. Purchasing a life insurance policy completes the insured’s obligations.
Individuals tend to buy life insurance and forget about it. Individuals need to continue to assess the need for protection at every stage of their life and stay abreast of trends that can have a direct impact on life insurance policies. Things change over time, and so do the benefits of life insurance. Newer and more innovative solutions may emerge that better meet individual requirements. Once you can explore the possibility of replenishing existing policies.
4. Life insurance is for repayment of debt
Life insurance is increasingly being sought after as a means of protection against debt due to changing lifestyle aspirations and the high costs of mortgages, education loans and other such debts. Life insurance isn’t just about paying debt. In fact, debt must be kept to a minimum in order to achieve returns from life insurance. When calculating life insurance requirements, both the family’s existing debt and other future financial requirements should be considered. In this way, you can also liquidate your debt and secure enough money for the future of your family.
5. Sufficient fixed-term life insurance coverage from your employer
This may be the case, but in most cases the compensation provided by the employer is insufficient to meet the needs of the family. Some employers offer limited compensation, such as covering deaths from accidents rather than illness. It is important to take a closer look at the policies and benefits and evaluate the available options with the big picture in mind.
6. Life insurance policies only benefit if you die or if the term expires
Life insurance policies access the cash value of insurance through withdrawals and tax-exempt loans for other needs, such as educating children, earning hard-earned retirement income, or funding other lifelong savings needs. It offers many life benefits, including the ability to do. Therefore, it serves as a long-term financial protection that serves as a savings when needed, as well as during unexpected or catastrophic situations.
“Some myths are benign and do not harm us, but that does not necessarily apply to those myths related to our personal finances. Life insurance makes these myths It’s a simple product and a comprehensive solution for protection after overcoming, “Shin said.
