Lies and Myths about term insurance

The Term Insurance is the ONLY sensible product that a life insurance company makes. However, the premiums are very low and hence NOBODY in the chain likes to sell this. So the manufacturer does not give any incentive to the sales person and the sales person is OBVIOUSLY not keen to sell it to you. Here once more let me destroy some myths…

  1. ‘Sir you will get nothing unless you die’ – this is such a strong line that it puts off many people right at the beginning. The real way of saying this is ‘sir this is not about your dying at all. It is about your family living after you..this inexpensive product will protect them and their dreams. See how the 2 statements mean the SAME THING but said in a very very different way.
  2. Sir Xyz….company’s claim settlement ratio is very low! This is the ploy that LIC uses very successfully. A younger company with a new and smaller book will have a low CSR. It does not mean a thing. If you have a normal life, and have filled the form honestly, you can assure your family that your claim would get paid. For a policy more than 2/3 years old the chances of getting the claim are more than 100% sure!
  3. Sir buy these RIDERS – do not buy any rider UNLESS you are being advised by an agent that you can trust. Riders are EXPENSIVE, AND HAVE no role to play for  DYI buyer. Makes no sense. Exactly like this say NO to a Return of Premium policy too. That’s another waste.
  4. Sir If you buy ONLINE, who will handle the claim amount? – well if this agent can ASSURE you that he will live BEYOND your life for sure, this kinda stupid objection makes sense..
  5. Company will not be interested: Why will a company pay a claim on a just Rs. 29,000 premium? they will not – this is what the agent tells you. Its a joke, Term insurance is very profitable as the insuring company sells off the book on an annual basis and makes the margin money. Agents are not actuaries and do not understand life insurance profitablility.
  6.  If you buy it online company will not support you like an agent does: well I am not against agents but If I have already shortlisted the company, the period, the amount of insurance – honestly why should the agent get the commission amount? for what?

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5 Responses to “Lies and Myths about term insurance”

  1. I don’t know who is the author of this article he/she done a fabulous job. Nowadays most of the peoples are not genuine in the insurance field. They were telling lots of lies to the customers to make a compromise.

    But in this article, you have clearly explained the Myths and Lies it’s awesome any one can easily understand about insurance sector by reading this article. I came to know lots of new things. It’s helpful for me to share with my friends.

  2. I agree to most of the points except agents.
    Yes getting good agents are difficult but they are helpful when one is not well versed with the process.

  3. Similar logic applicable to IFAs (Financial advisors) as well.

  4. Bottom line: You need to understand the product and returns before paying / investing.

  5. Why do say all riders are bad? What is your opinion about critical illness rider?

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