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Myths About Term Insurance Debunked

Myths About Term Insurance

Term insurance is a cornerstone of financial planning in India. It offers a guaranteed financial safety net for your loved ones in the event of your unfortunate demise. However, a web of myths and misconceptions can often shroud this crucial financial tool. Let's debunk some of the most common myths surrounding term insurance in India, empowering you to make informed decisions for your family's future.

Common Myths About Term Insurance

Myth #1: Term Insurance is a Waste of Money – You Get Nothing Back

  • Truth: Unlike whole life insurance plans that accumulate a cash value, term insurance focuses solely on providing a death benefit. However, this doesn't make it a waste of money. Consider it an investment in your loved ones' security. The death benefit payout can help them manage living expenses, pay off debts, and achieve crucial financial goals you envisioned for them.

Myth #2: Term Insurance is Only for People with Dependents

  • Truth: Even if you don't have dependents like children or a spouse, term insurance can be valuable. It can help cover outstanding debts (e.g., mortgage, car loan) or other financial obligations, preventing them from becoming a burden for your loved ones. Additionally, if you have aging parents financially reliant on you, a term insurance payout can ensure their continued well-being.

Myth #3: You Need Rs. 1 Crore Term Life Insurance Cover

  • Truth: The ideal term insurance coverage amount depends on your individual circumstances. The Rs. 1 crore figure might be a starting point, but consider your family's financial needs, future goals (e.g., child's education), and outstanding debts. Use calculation methods like Human Life Value (HLV) or Income Replacement Approach to estimate a more suitable coverage amount.

Myth #4: Term Insurance is Expensive

  • Truth: Term insurance plans are generally one of the most affordable life insurance options. Premiums are calculated based on your age, health, and chosen coverage amount. By starting young and maintaining a healthy lifestyle, you can secure substantial coverage at a relatively low cost.

Myth #5: My Employer's Life Insurance Coverage is Sufficient

  • Truth: While employer-provided life insurance is a benefit, it often comes with limitations. The coverage amount might be insufficient to meet your family's long-term needs. Furthermore, this coverage typically ends with your employment. Having your own term insurance plan provides additional security and ensures your family is protected irrespective of your employment status.

Myth #6: Term Insurance Plans Have a Complex Application Process

  • Truth: The application process for term insurance has become streamlined in recent years. Many insurance companies offer online applications and even facilitate medical examinations remotely (in some cases).

Myth #7: Term Insurance Claims Get Rejected Often

  • Truth: Insurance companies strive to settle claims efficiently. However, claim rejections can occur due to non-disclosure of pre-existing medical conditions during the application process or policy violations. Being honest and transparent about your health and understanding the policy terms can help ensure a smooth claim settlement process.

Myth #8: Term Insurance Doesn't Offer Any Flexibility

  • Truth: While the core benefit of term insurance is the death benefit, many plans offer riders as optional add-ons. These riders provide additional coverage at an extra cost. For instance, a waiver of premium rider ensures your policy remains active even if you become disabled and unable to pay premiums.

Myth #9: Term Insurance is Only for Young People

  • Truth: While starting young offers lower premiums, term insurance is valuable at any age. If you have dependents or outstanding financial obligations, consider securing your family's future with term insurance, even if you're starting later in life.

Myth #10: You Don't Need a Financial Advisor for Term Insurance

  • Truth: Financial advisors can be valuable resources. They can assess your financial needs, risk tolerance, and goals to recommend a suitable term insurance plan with the right coverage amount and features. They can also guide you through the application process and answer any questions you might have.


By debunking these common myths, you can approach term insurance with clarity and confidence. Remember, term insurance is a powerful tool for safeguarding your loved ones' financial well-being. Understanding its benefits, dispelling misconceptions, and potentially seeking professional guidance empowers you to make informed decisions to secure your family's future.


The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale

Suggested Plans

Bharti AXA Life Flexi Term Pro

  • A Non-linked, Individual, Non-participating Pure Risk Premium Life Insurance policy
  • The plan offers two options: Without Return of Premium and With Return of Premium
  • Under the Without Return of Premium variant, you have the option between Single Life cover or Joint Life Cover i.e., cover for your spouse under the same policy.
  • Flexibility in policy and premium payment terms