Many people lack a strong understanding about life insurance. It is not something most of us learn in school but it is one of the cornerstones of financial planning and protecting our loved ones. The following are 7 Life Insurance myths debunked.
Myth 1: Life Insurance Costs Too Much.
It is less than you think! Many people will not buy Life Insurance because they feel they overestimate the cost of a policy. 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.
Even single people need at least enough life insurance to cover the costs of debts, medical and funeral bills. If you are uninsured, you may leave behind unpaid expenses for your family. The earlier you buy life insurance, the better. The premiums are cheap because age and health is in your favor.
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 your 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.
Myth 7: Buying It Online Is Easier & Cheaper.
Not always. We know you like to bargain hunt and purchase select products at lower prices online, but buying Life Insurance should not be one of them.
You can take on more risk with online policies, often being charged higher premiums. Moreover, online insurers may add specific terms and conditions in that could limit the policyholder’s current or future benefits. Using an experienced Insurance Broker can help get you the policy that best suits your needs plus making it easier and less stressful.
These are just some of the key myths that people have about Life Insurance. I can help you understand more of the key benefits of Life Insurance such as how it can fit any budget and help you and your family.
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