5 Insurance Myths Busted! This National Insurance Awareness Day, Let's Decode The Insurance Confusion

Too many plans, puzzling jargon, and the fear of skyrocketing premiums often leave people struggling to make a final decision for their insurance policy. Even after hours of research, many step out last moment of finalising the policy for purchase, thanks to uncertainty and procrastination. If that sounds familiar, here we are with experts' opinions about why insurance plans like health and life are important. This National Insurance Day, let's revisit our concepts of insurance and debunk all the myths related to them.

National Insurance Awareness Day

National Insurance Awareness Day is observed every year on June 28. The day serves as a stark reminder for millions of Indians who are not covered with a sufficient health insurance or life insurance. Many people don't even care to think about insuring their motor vehicle with a sufficient coverage and end up suffering at the time of emergencies. Similarly, many don't even consider the importance of insuring their valuable assets like digital devices, properties, etc.

From health, life, home to business, paying to cover emergency expenses provides a financial safety net during unforeseen events, be it a medical emergency, an accident or a loss. In financial year 2023-24, India's insurance penetration (the ratio of insurance premiums to GDP) declined to 3.7%, which was down from 4% in the previous year, revealed the Insurance Regulatory and Development Authority of India (IRDA) in its annual report.

"The insurance industry in India is undergoing a significant transformation. Insurers are working closely with the regulator to make insurance more accessible, affordable, and relevant for customers across all cohorts. IRDAI's visionary reforms and continued focus on customer awareness have laid a strong foundation for deepening insurance penetration and advancing financial inclusion," said Tarun Chugh, MD&CEO, Bajaj Allianz Life Insurance

As we observe the National Insurance Awareness Day today, here are the top myths related to these products among people.

"In India, insurance is often misunderstood-not due to lack of access, but due to a deep-rooted web of myths. Many believe insurance is only for the elderly or that it's a waste of money if not immediately used. Others wrongly assume that all claims are rejected or that employer coverage is enough. These misconceptions prevent people from securing their families and futures," said Ajay Shah, Head - Distribution, Care Health Insurance

Top Insurance Myths Debunked!

"The most common misconceptions around health and term insurance center on affordability, premium structures, and ideal purchase timing. Furthermore, many buyers mistakenly believe that all insurance plans are largely uniform or that corporate coverage is sufficient," said Vishal Gupta, CEO, PhonePe Insurance.

Corporate Coverage is Enough!

Employers in India provide insurance coverage to their employees and many extend the facility to their family members as well. While the corporate insurance provide extensive coverage, it may prove to be not enough due to several factors like coverage amounts, limited coverage, and potential limitations imposed by the employer.

Insurance is Too Expensive

Regular premiums which may vary on multiple factors like age, city of residence, etc, are often perceived as expensive by people, especially when the insurance goes unused or unclaimed for years. Many even decide to discontinue their insurance plans whenever they face changes in financial priorities.

No Need To Buy Insurance When You Are Young

Many perceive that purchasing health or life insurance is not important at a young age because youngsters don't have a liability to cover. But certain covers offer the benefit of early premium lock-ins; hence, people can take advantage of paying a lower amount in premiums for insurance.

"Insurance is perceived to be an unnecessary expenditure and something that's only required much later in life. In reality, the ideal time to buy both health and term insurance is in your 20s or early 30s. This is when premiums are the lowest, medical underwriting is favourable, and long-term financial protection is secured at the best value. With term insurance, buyers must ensure that the cover is around 10-15 times their annual income, so their family remains financially secure, even in their absence," explained Vishal Gupta.

Filing Claim is Complicated

Many see filing a claim as a complicated process that requires hours of preparation and months of waiting for approval. "Digitisation today has transformed the process, making it incredibly convenient to file a claim. Streamlined digital platforms have significantly simplified and expedited the claims process," according to Aditya Sharma, Chief Distribution Officer - Retail Sales, Bajaj Allianz General Insurance co.

I am Well Aware I don't Need Any Assistance For Insurance

Stressing on the importance of developing clarity around insurance before final purchase, Gupta, noted, "As a trusted destination for all insurance needs, PhonePe's advisors are available round the clock to help provide transparent, real-time plan comparisons to buyers. They are trained to approach insurance-selling with a customer-first mindset instead of just selling policies."

What To Check Before Purchasing Health Insurance?

Health insurance provides last-minute coverage to save people from their out-of-pocket expenses, especially at the time of medical emergencies. Health insurances come with multiple clauses like co-payment, consumables, etc.

"While purchasing health insurance, one must consider critical factors such as co-payment, consumables, and room rent cap, which will have a direct impact on the claim settlement amount. Users can avail these options while choosing from a wide range of comprehensive plans on the PhonePe platform," added Gupta.