There’s a famous saying. “If I die, why do I need money?” You don’t but your loved ones do. Yes, you cannot put a price on life insurance as it’s priceless. Sadly, a number of myths have grown over the simple life insurance plan. Several people now take these myths as facts. This article will bust some famous myths on life and health insurance.
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When you are young and in the peak of health, life insurance might seem a burden and totally unnecessary. The fact of the matter is, life insurance is best availed when you are young and healthy.
Life insurers prefer to ensuring the youth, as they are less likely to contract a disease. Insurers offer life insurance plans to the young at low premiums as they are less of a risk.
Buy the life insurance plan when you are young, preferably before getting married and financial responsibilities to rise. Parents too are dependent on you as they get older. So get the life insurance protection at affordable rates, right now.
The insurance offered by your employer is attractive, but it’s not sufficient. It’s not enough to cover any current or future liabilities. Your employer-sponsored insurance plans offer fixed benefits and you can’t add riders. (Riders are additional protection at slightly higher premiums).
If you change jobs, the coverage ends and you can’t transfer the plan as you were never the owner of it. You would be forced to avail life insurance at higher premiums as you get older and health conditions deteriorate.
The very purpose of life insurance companies is to settle you're and loved one's claims. This is why the insurer makes public their claim settlement ratio.
The onus is on you to truthfully declare accurate personal information. If you are a smoker or drinker declare this before availing the life insurance plan. It's better than the life insurance proposal gets rejected, rather than the claim settlement.
If you want a hassle-free settlement, give accurate medical details, disclose any other life insurance plan you hold and renew the plans regularly. Opt for a life insurer with a claim settlement ratio of over 90%.
See Also: 10 Best Things About Term Insurance
A term life plan is a pure protection plan and a basic form of life insurance. It gives you peace of mind and you can’t put a price on this. You pay a premium for a sum assured in a term life plan. On the death of the policyholder within the term of the plan, the insurer pays the sum assured to the nominee. This plan offers no survival benefits. This is the reason why many people say, why pay for a life insurance plan with no returns?
Never mix insurance with investment. Life Insurance is for risk cover and only term life insurance offers this. If you have dependents, make sure to avail of term life plans. Many people avail of life insurance plans like endowment plans and ULIPs for the savings and investment benefit. These plans offer low mortality cover and the amounts are insufficient for your family to enjoy a decent lifestyle. You are better off availing a term life plan and investing based on risk profile.
Myth 5: A Sum Assured Which Covers Existing Income and Expenses is Sufficient
Your family’s lifestyle grows as income rises. On an untimely demise, there’s no money left to cover the loss of salary. The responsibilities of repaying loans like home loan EMIs and the burden of costly education fall on your family. A sum assured which covers just the existing income and expenses are never going to be enough.
This is why you must avail term life insurance with sum assured of 10-15 times annual income. Your family gets the money they badly need.
In today’s fast World, lifestyle diseases are on the rise. Many youths fall prey to diabetes and heart/lung ailments even in the late twenties. So you can’t say I am young and don’t need health insurance. Many health insurers have a 2 year waiting period for pre-existing diseases. It’s wise to avail health insurance before any diseases like diabetes can strike. Your health is insured without any exclusion. A health insurance plan availed at a young age, renewed regularly is a must for a hassle-free claim settlement.
Health insurance plans have a waiting period before which the claim will not be settled. This is the waiting period and is usually 30 days before accidents are covered. Health insurers may also have a 2-4 year waiting period before pre-existing diseases are covered. The insurer doesn’t settle claims until the waiting period expires and then even pre-existing diseases are covered.
Myth 3: You Need 24 Hours of Hospitalization for Claim Settlement
It’s popularly believed that to get the health insurance claim settled, you must be hospitalized for at least 24 hours. With technological advances and medical breakthroughs, some surgeries and procedures require less than a day. Insurers cover daycare treatment for Angiography, Eye Surgery, Prostate, Sinusitis, Piles / Fistula and Hydrocele among others. So yes, you are covered even if you are not hospitalized for 24 hours.
More than 140 surgeries are covered by insurers with or without restrictions. Dental treatment is neither day-care nor requires 24-hour hospitalization. These are out-patient procedures and they are covered under certain health insurance plans.
Myth 4: All Pre-Existing Ailments are Covered After 48 Months
Most health insurance plans cover pre-existing diseases after 48 months. But, this coverage is conditional to you making honest medical disclosures at the time of availing the health insurance plan. This means if you actually suffer from disease when availing the health insurance plan but you were unaware of it and have declared yourself medically fit, the insurer would honor the claim. If the insurer suspects you knew of this ailment when availing the plan, the claim would not be honored. So it’s better to make honest disclosures when availing the health insurance plans.
Many smokers believe they can’t get health insurance. This is not true. The insurers bear a higher risk of insuring smokers and simply charge higher premiums to insure them. If you have declared the smoking habit, insurers insist on medical tests. To get the medical tests done when availing the health insurance plan to avoid hassles in claim settlement. Constantly update the insurer on lifestyle changes like an increase in the number of cigarettes smoked or deteriorating health conditions. Heavy smokers and drinkers would not get health insurance.
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