6 Life Insurance Myths Debunked by Kelly
Myth #1: Life Insurance Costs Too Much
It is less than you think! Costs depend on a number of factors, including your health, age, tobacco use, and gender. As one example, a healthy 35-year-old male can expect to pay about $20 per month for $250,000 on a 30-year term.
Myth #2: I’m single and young, so I don’t need life insurance
Single people often forget that they need at least enough life insurance to cover the costs of debts, medical and funeral bills. If uninsured, you may leave behind unpaid expenses for your family. Don’t forget, the earlier you buy life insurance, the better because the premiums are based on age and your health is on your side!
Myth #3: My Term Life Insurance Coverage at Work Is Sufficient
This one comes up A LOT. You should know in most cases; coverage goes away if or when you leave the employer. This means if you quit, get fired, or RETIRE you will lose the coverage. Put that in perspective with the premium quoted in Myth #1 and you’ve just cost yourself significantly more in premium. Most people retire in their 60’s. That same estimate quoted in Myth #1 will now cost $105 per month for a 20-year term vs the 30-year term.
Also note, the amount of coverage is generally restricted to 1–2 times the salary, which in most cases wouldn’t be sufficient to meet the expenses of dependents in case of the unfortunate incident of death.
Myth #4: Only Breadwinners Need Life Insurance Coverage
The cost of replacing the services formerly provided by a deceased homemaker can be higher than you think. Insuring against the loss of a homemaker may make sense, especially when it comes to cleaning and daycare costs. Put into perspective some of the responsibilities of the homemaker…getting kids dressed, fed, off to school, back from school, off to extra-curricular activities, cleaning, homework, and dinner. Go to www.care.com for an estimate of these services. The average costs range from $15-$20 per hour, costing you $2,400 per month for a typical 8-hour day. Wouldn’t it be easier to buy a life insurance policy for $20 per month??
Myth #5: I Have Existing Health Issues. I Cannot Get Life Insurance.
There’s more to it! There are a number of other variables that insurers look at before offering coverage at certain rates for specific health problems. Although premiums may be slightly higher, most life insurance companies are willing to offer you coverage if you are suffering from conditions like diabetes, high cholesterol and arthritis. Past history of cancer; no problem. Depending on the stage and how many years in remission you can qualify for a standard rate! The point is, it doesn’t hurt to ask. Most carriers provide pre-screening which allows an agent to get an idea if the carrier will offer coverage and at what cost before submitting an actual policy.
Myth #6: It’s Only Good for Funerals & Inheritances
That’s just not true! An unfortunate stigma attached to life insurance is that of death. Traditionally, people bought life insurance for its death benefits, and these benefits are why many still do. But, life insurance offers several living benefits
- Cash value could be used to supplement retirement income
- Help pay for college tuition
- Benefits paid from life policies aren’t subject to tax.
- Immediate expenses such as medical bills, taxes, loans
- Payoff mortgage debt
- Payoff student loan debt
With more parents being listed as a co-signor for student loan debt, many people purchase a term life insurance to cover the debt for the length of the loan. This way, should the unexpected happen, the parent is not stuck holding the debt.
Homes often grow and change alongside the people living in them. If you’ve added expensive furnishings or made substantial upgrades, it’s important to re-evaluate your homeowners insurance and make sure your policy reflects those changes. Here are four instances when it may be beneficial to review and adjust your coverage.
Remodeling or Renovation Work Home improvement projects typically increase the value of your home, which usually calls for more coverage. But that doesn’t necessarily mean your insurance rates will automatically increase. In fact, some projects, like adding a new roof, may help you save on your monthly home insurance premiums. Just be sure to notify your provider before any work begins.
Adding a Pool or an Outdoor Trampoline Because these fun home features come with increased risk of injury, they’re labeled an attractive nuisance. Upping your liability insurance can help keep you protected if there’s ever an accident on your property and a subsequent lawsuit.
Acquiring New Valuables Whether you inherit them or purchase them, expensive goods such as jewelry, art, rugs and antiques should be added to your policy. Increasing your coverage is the only way to safeguard them in the event of damage or theft.
Starting a Home Business Many home-based business owners don’t realize they have little, if any, coverage from a homeowners or renters insurance policy. Since a new home business likely means purchasing new technology and expensive equipment, you may need to get additional protection.
You worked hard for your home. Secure your belongings by updating your coverage to match your circumstances.
Many have asked about Healthcare Open Enrollment. Although all of the information is still not fully released, below is what you can expect thus far.
- Open Enrollment starts November 1st and continues through January 31st. If you want or need to change your policy by January 1st, we MUST do so by December 15th.
- Land of Lincoln closed as of 10/1/16. A special election period has been opened up for those that were affected by their closing. During this time you can enroll in a new plan.
- UHC and Harken Health will no longer offer individual plans as of 12/31/16. Anyone affected by this change will need to enroll in a new plan by December 15th.
- Out of Pocket Maximums have increased from $6850 to $7150 (the out of pocket max varies per plan. The maximum allowed on ANY plan is $7150).
- At this point, the remaining carriers are Blue Cross Blue Shield, Health Alliance, Am Better, and Cigna.
- Plans purchased before 2014 are still being extended through 2017.
- If you are happy with your plan you do not need to do anything.
- *If you are receiving a subsidy (aka assistance) I strongly recommend that you verify the income information that was originally reported. You may actually qualify for additional assistance!
- *Any changes/new enrollment done by December 15th will take effect January 1st. Any changes/new enrollment done after December 15th will take effect February 1st.
- Carriers have opted to remove or reduce the commissions paid to agents. This will force me to charge a fee for the coming year. I am still working out the details of what that fee will be and will update you accordingly.
Life Insurance Awareness Month
Life Insurance Awareness Month is in full swing. No one really wants to think about Life Insurance, but if someone depends on you financially, it’s a topic you can’t avoid. This is the time to review your life insurance situation.
What will your family do if the primary wage earner passes away? What assets are you willing to give up to make ends meet? These are questions that many people don’t think about until it is too late.
Life Insurance Can Help
1 in 3 households would have immediate trouble paying living expenses if the primary wage earner died, according to the 2016 Insurance Barometer Study by Life Happens and LIMRA
In the event of a tragedy, life insurance proceeds can…
- Help pay the bills and meet ongoing living expenses
- Pay off outstanding debt, including credit cards and the mortgage
- Continue a family business
- Finance future needs like your children’s education
- Protect a spouse’s retirement plans
Getting Life Insurance doesn’t have to be hard (or boring). The importance of life insurance is helping them get the coverage they need. There are many types of life insurance but for all of them, the bottom line is the same, they pay your family after you die, allowing loved ones to remain financially secure.
And, many people haven’t bought life insurance or more of it because they’re unsure of how much or what type to buy.
Do You Have Enough Life Insurance ?
Life insurance is something that no one likes to talk about; however 86% of Americans believe that life insurance is something most people need. So, how do you determine how much life insurance you will need?
Doing The Math
To start, estimate what your family members would need after you’ve gone to meet immediate (i.e. funeral), ongoing (i.e. rent or mortgage, other everyday bills), and future financial obligations (i.e. college and retirement).
Add up the resources your surviving family members could draw upon to support themselves (i.e. savings, spouse’s pension etc.). The difference between the two is the amount you would need in life insurance.
For health insurance, I try to get a full picture of your health history to understand what services will be used to determine which plan/carrier is best. I review rates annually. Although you may not hear from me, I am reviewing your package each year to make sure you are STILL receiving the best coverage for your needs.
I can help you understand the differences between Life Insurance and what is the right coverage for you. Please contact me to find out more at 708.444.0050 or [email protected].
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