Much of what you've heard about insurance may be half trust or pure myth. These can cost you dearly as you may end up missing most important type of insurance. It may not be entirely your fault. Conflicting versions and lack of clarity makes this key financial topic plagued with confusion. Here we try to bust some term insurance myths and how you should really protect your family and dependants.

Term Insurance is only for young people.

It is true that the premium a young person in late 20s has to pay is lesser premium as compared to an aged person who is in mid 40s. However, over the years, life expectancy has increased and therefore insurance companies are more liberal in issuing term polices. Most companies have re-launched their term plan that allows people up to age of 65 to buy term insurance and cover themselves until age of 75. Term insurance premiums have also been reduced by up to 20%-40% over the last couple of years making them affordable for even aged people.

IDBI federal has launched a term plan exclusively for people above age of 50 and people up to age of 85 can enter the plan.

I should wait for term insurance to get cheaper.

This is most flawed thought. If you have a need for insurance, today is the best time to buy it. Look at all the plans that are available in market, understand the features and choose the plan that suits your need. Term insurance rates have come down and may drop further, but you cannot wait for this to happen.

Suppose the rates were to go down further, you could buy a new policy if you continue to be insurable, i.e. you have not contracted any major health disorder. You can discontinue your expensive term policy once your new cheaper policy is in force.

Buying term insurance is cumbersome and irritating

Buying term insurance is as easy as buying any other insurance policy. You need to complete the proposal form by providing true and complete information along with the cheque. Provide documents related to your income and undergo a medical examination and test if required. The policy is normally issued within 7-15 working days.

Term insurance does not provide terrorism cover.

Most people are confused whether the term polices provide death benefits if death of assured occurs due to acts of terrorism. All term polices will cover death due to terrorism. If there were any exclusion, it would be explicitly mentioned on the policy document. If all information is correctly provided in the proposal form claims would normally be paid.

The most common exclusion is death due to suicide within 12 months of purchasing or reinstating the policy.

Term insurance is sold and not bought

There is so much of awareness about term insurance these days that more and more people prefer to buy term insurance. There was time when term insurance was a product was not sold due to lack of awareness and higher premium rates.

Remember, all financial advisors and analysts unanimously agree that there is no substitute for term insurance and today is the best time to buy one. In fact people ask for term insurance before making any other financial commitments.