If you are building a fortress against an unseen enemy, would you build only three walls instead of four? Or, would you suddenly stop focusing on it and start planning a guesthouse inside it?
I’m not being ironic here; this is precisely what many insurance policyholders do with their insurance. There are many roadblocks and myths in people’s mind when it comes to buying an insurance policy. Let’s clear the air on that.
Don’t Believe in Insurance Concept
Many people don’t believe in Life Insurance, as they perceive that it’s linked to death. For some others, paying premiums are like waiting for hours in front of a Las Vegas slot machine plunking in coin after coin (keep paying premiums without a return).They believe that Insurance does not do any good to them while they are alive and is expensive. But, they don’t hesitate to take a Motor Insurance Policy fully understanding the fact that the person driving the car is far more important than the car itself.
Insurance being a risk cover comes with a cost. But remember, you are not buying a life insurance for yourself, but for those who are close and dependent up on you.
Also, Life Insurance cover need not be just about death cover, it can be for disabilities and critical illness as well with Survival benefits which would come in handy to the individuals when they are disabled or critically ill.
Awareness and Openness to understand these risks and the various options to cover these risks is the key.
Insurance is an Investment
There are others who try to fetch returns on the premiums paid, thereby by mixing up insurance and investment. But insurance cannot be considered as an investment tool.
The very purpose of insurance is that it is an assurance that You / Your loved ones will be protected financially in case the unfortunate happens. So consider life insurance as a protective, financial instrument and not a wealth creation tool. The investment components should be always considered as added benefits and not your criteria to choose a life insurance policy.
Agent, the Trustworthy Advisor
A lot of people end up buying an insurance plan their Insurance agent presented to them without really understanding what they are buying into and whether it really matches their requirement. Insurance agents would typically try to sell you schemes that have higher commission for them, and may not be the best scheme for you.
Remember, Agents may try to create a panic situation, drop in the word “guaranteed” many times – it’s a selling trick, give illustrations with high projections or even more. Therefore, it is important that you take a right call for buying a plan and coverage based on your financial needs, and not get influenced by the insurance agent’s sales pitch.
A good sales agent or consultant would always listen and capture your life details – income, family, assets, liabilities, dreams and ambitions and draw up a suitability analysis based on your specific details and risk appetite.
Read this post to know more: Choose The Right Umbrella
Take Only What They Can Afford
It is true that you need to pay the premiums on time. So many people take a premium that they can afford, without considering their financial needs and plans.
While planning your insurance, think about replacing your income for your family, covering your liabilities and other outgo’s like children’s education, home buying plans, marriage etc, which your family might struggle to pay for if you are not around.
A good term cover with at least 10 X 12 times of your Annual Income wouldn’t be so expensive if you take it at the right age & time.
Friend’s Policy is Good One
What happened the last time when you visited a restaurant? You sought a whole lot of details of each exotic dish, but finally settled for a common one. This happens while you shop for insurance too! You search for various options, and end up choosing a plan that your friend has chosen.
Well, it’s a golden rule of investing that what’s good for your friend may not work for you. So what are the things you should learn before you buy insurance? Every person, Every Family is different – Your Life cover should be customized to your need.
Take, Pay and Forget
Change is the only constant thing in life. As weird as it may sound, this truth applies to all of us continuously in life. So when everything changes at some point in our lives, then how can insurance be any different?
You should re-evaluate our insurance needs regularly and increase the coverage amount when our lives change. Increasing dependents, liabilities, change in family situation, career, income, all these need to be reviewed periodically to re-plan your insurance needs. This is to help your family to keep up the lifestyle in your absence.
It is true that you can’t put a value for human life, but life insurance companies do!
Insurance is a safety net for all the dreams that you have for your family.