When it comes to your finances (or anything else for that matter) people often have many opinions to share. A trusted friend may advice you one way while a wise colleague might tell you to do the opposite.
So, with that in mind, let’s take a look at the bad advice people often get about insurance:
1. Don’t invest in ULIPs!
ULIPs are one of the most reliable high ROI options out there. They combine the dual benefits of insurance and investment so you can use your funds towards achieving certain financial goals once the term is up. Low-cost ULIPs offer affordable premiums and can be topped off if you have surplus funds, making them quite flexible. Furthermore, discontinued once the minimum term period of 5 years is up. You can even add riders to your policy for additional benefits as per your needs.
So, whoever said not to invest in ULIPs probably didn’t know about all the advantages of one.
2. Insurance is a waste of money!
Some people think that investing in life insurance is a total waste of money since investors who survive the term period do not get any money. However, this is bad financial advice. While it’s true that you won’t get your funds back on surviving the term, it’s also true that your family will need the funds to maintain their lifestyle and be secure if something unfortunate were to happen. Being able to ensure their safety should take precedence over getting funds back. With low premiums, not having the funds returned should not pinch you.
3. A contingency plan is more than enough!
Many believe tend to believe that they are doing their bit for their family by setting up a contingency fund. More often than not, these are in the form of FDs and RDs. While they do allow a certain accumulation of wealth, the ROI is certainly not enough to take care of your family in the event of an unforeseen situation the way a life insurance policy can. Remember, life insurance policies offer extremely high covers, and figures like 1 Crore are fairly commonplace when it comes to insurance. Can your generic FD promise you the same?
4. Always go for the lowest rates!
Comparing rates is essential and so is saving money wherever possible. However, always going for the lowest rates is not necessarily the safest thing when it comes to insurance. This is because the investment can backfire as they might not offer complete benefits when compared to other policies. Moreover, they may come with riders that you might regret in the future. Therefore, although you want to save money, going for the cheapest option is not always a good idea.
5. Health insurance is enough!
Some people believe that just investing in health insurance is more than enough. While that may be true for them, it won’t necessarily be true for you. You must consider your family’s medical history and make decisions accordingly. For instance, if your family has a medical history of cancer, then you must consider add-ons like Cancer Care to your regular health insurance. This is because these add-ons are designed to help combat the specific diseases and the expenses that come with them. A generic policy may cap off sooner than one that is taken with a disease like cancer in mind.