Why Some People Do Not Buy Life Insurance Policies in India

Why Should You Buy Life Insurance?

In a study, individuals aged 22-30 years showed a higher intent (18%) to buy a life insurance policy when compared to the older age group of 31-40 years (16%). The study was conducted by Nielsen and the findings were published in a report titled “Investing for a Better Life” in 2013.

Getting a life cover is probably one of the most important investment decisions you will ever take. It is needed by anyone who has a family to support and who is an income earner, according to the IRDA. Life insurance is meant to provide cover against death and disability. It provides future financial security to your family in the case any unfortunate incident. However, Indians do not pay heed to the need for this because it does not offer high returns. In reality, it not meant to offer returns, it is meant to offer security. Read on to know some of the reasons why people shy away from buying a policy in general and online term insurance in particular.

Devil May Care Attitude

Indians have this attitude that they will deal with the situation when it finally arrives. When the breadwinner of a family passes on, the entire family is affected financially. While you will not be here to deal with the situation at all, your family may face the brunt of your poor decisions. They may even have to cut short their necessary expenditures due to lack of money, such as your child’s education and healthcare needs.

Talking About Death is Taboo

Talking about the death of a person is considered inauspicious and insensitive. Consequently, there is no mention of protection against death. Fact is, we are mortals and death can come knocking on anybody’s door anytime; young or old. Therefore, it is better to be safe than sorry and fulfil your responsibility of providing your family with the necessary financial protection when you still have time.

Lack of Money

Lack of money is another reason cited by people for not getting a life cover. Even when they do have money, they prefer investing in products that offer returns. In such a case, you can consider buying a term plan. Term insurance rates are considerably lower than other policies mainly due the fact that the entire premium amount goes towards funding the risk. Bharti AXA recommends buying the policy at an early age and quitting smoking to get lower premium quotes. You can use the term life insurance calculator online to determine the most affordable premium amount. You will need to select the tenure, cover amount as well as furnish some personal details to calculate the premium.

Claims Are Rejected

It is one of the most common myths related to the life insurance industry that claims are rejected. In reality, this is not the case. In fact, the claims settlement ratio by private insurers rose from 88% in FY14 to 89.48% in FY1, says an article published in Livemint. These figures totally debunk the myth, and indicate that 90% families received financial security on the demise of a loved one.

Claims cannot be rejected unless there is a valid reason to do so. One of the most common reasons for claims rejection is providing improper information while buying a policy. For instance, if you are suffering from a chronic disease, it is better to inform the insurance company upfront.

As per the IRDA regulation, the insurer is given three years to detect misstatement by the consumer. If the policy has completed three years, the insurer cannot reject claims even if the information provided by you was inaccurate, says an article published in Jagoinvestor in December 2015.