Why people dont like Term Insurance and why they are wrong

One of the reasons why most people do not take Term Insurance is because “They don’t get anything back at the end”. In this article, I will show you why this is a psychological issue. Even if you get your money back at the end of the tenure it won’t make much difference. In this article I will prove that the argument “Term Insurance is waste of money because you don’t get anything back” is amazingly idiotic.

What is the main Issue with People not liking Term Insurance?

Why people don’t like Term Insurance is the question. The answer is simple: because you don’t get anything if you survive the whole tenure and hence the amount paid as premium is wasted – this is claimed by millions. Fair enough! The first thing is, these people do not understand or appreciate the Importance of Life Insurance. Now let’s see this situation from a different angle. Assume you get the money at the end in your Term Insurance. Let’s see a case study of a general Family. How does a family look like:

Manish is 28 yrs old and got recently married (oops!!). He earns close to 40,000 per month. His monthly expenses is around Rs 25,000 overall and he saves 15,000 per month (hehe). He also have his parents as financially dependent on him. He is 30 yrs away from his retirement. He calculated his Insurance Requirement and it was close to 50-60 lacs minimum. Let’s take it as 50 lacs for simplicity for now.

So Following are the questions needed to be asked

    Do you want to put your Family at Financial Risk because you are not getting 2 months worth of expenses back?

    For a small amount you “don’t get” at the end are you not being childish to Secure your family?

    Don’t you think you are seeing Term Insurance from a wrong attitude?

    Are you not concentrating on “what you are not getting” rather than “what you are getting”?

We already have “Return of Premium Term Policies”, but they are themselves idiotic because they are again designed to just exploit the weakness of people who feel that term insurance is waste of money

because they don’t get their money back. Read this to understand why Plain Term Insurance is better than “Return of Premium Term Insurance policy”.

Reason why Indians dont like Term Insurance

Reason 1#: Most of the people concentrate on number and explicit data, like the money they are not getting back or its a waste of premium if nothing happens to them. They fail to look internal advantage which term insurance  provides.

Reason 2#: We are emotional with Money, we are more concentrated with Growing money and getting money back rather than what value it provides in our life.

Reason 3#: Most of the people think that the probability of dying is much lower than an average person which is again totally idiotic. We just don’t want to visualize a bad situation and hence do not concentrate on that situation.

Conclusion

In life we don’t appreciate things like Health, small moments of happiness, nature, time spent with our loved ones which are most wonderful and real things in life. Term Insurance is one of the similar things in personal finance domain. You just need to shift your focus of view from “what you are losing” to “what you are getting” once you do this with Term Insurance and your Life, both will become wonderful.