Four Common Life Insurance Myths Debunked
Updated: May 31, 2022
A life insurance policy that is tailored to your needs can be a valuable source of financial protection, especially when it comes to protecting your loved ones during a stressful time. However, how can you discern what your life insurance needs are if there are so many myths? By arming yourself with the right knowledge, you can be more confident in your decisions.
Here are some of the most common misconceptions about life insurance. By debunking these myths, you’ll have a better understanding of how to get the most out of life insurance.
Myth 1: You have enough life insurance through work
Life insurance through your employer is certainly a perk. But it might not be enough coverage. However, it’s not your only option.
When it comes to workplace insurance policies, you don’t own the plan, the company does. Which means they have the right to change it at any moment.
If your employer's plan changes, you may be left with insufficient coverage just when you need it most. Having private life insurance gives you more control and stability, so your coverage is there when you need it.
Myth 2: Life insurance is too expensive
You may feel burdened by your monthly or annual premiums - the charges you pay for your insurance coverage. As age is the primary driver of life insurance costs, purchasing permanent life insurance early is a great way to lock in the lowest prices, - the younger you are the more affordable it is.
If you’re on a budget, term life insurance may be the best fit. This type of insurance refers to a shorter-term plan that provides coverage over a fixed period of time. This could be 5, 10, 20 or more years. If you’re young and healthy, your premiums could be as little as $30 a month.
You typically pay less upfront for term life insurance. Keep in mind that your rate isn't locked in for life. It increases every time you renew. That’s why many term policies come with a feature that lets you upgrade to permanent life insurance.
Myth 3: Life insurance is only necessary for funeral expenses
With life insurance, you're buying a tax-free death benefit for your family. Your beneficiaries receive the death benefit when you die. Often, people see this money as a way to cover their funeral costs. It certainly can do so, but you should also consider other financial obligations your family may have to take care of after you die.
What expenses do they currently depend on me for?
Would they be able to cover them if I died?
It could be that your family relies on you for financial support. You might pay the mortgage or pay tuition. In the event of death, the right life insurance plan can leave them with enough money to cover all those expenses and any outstanding debts.
Myth 4: Your life insurance coverage must be the same as your partner's
Your life insurance coverage needs will be determined by your debt and income levels. It's likely that you and your partner will need different plans unless your incomes are the same. Having a pair of personalized policies helps ensure that you and your partner are both covered appropriately. This way, you won't be overpaying for coverage you don't need.
To better understand your life insurance options, let's book a call.
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