10 Life Insurance Myths

Life insurance is a common financial planning tool. But it can be misunderstood. In this article, we will bust 10 life insurance myths.

1. You Only Need Life Insurance When You’re Older

Many have the misconception that you do not need life insurance until later in life. But younger people need life insurance as well, especially if you have a family or financial obligations. Additionally, the younger you are the less expensive your premiums will be.

2. Life Insurance is Too Expensive

There is a large variety of insurance policies, typically most people can find one that fits their budget. Typically, term insurance is the cheapest option. A term policy for a 30-year-old can average as little as $170 a year.

3. You Only Need a Policy if You Have Dependents

Having dependents is an important reason to have a life insurance policy, but it is not the only reason. You may choose to purchase a policy to help ease the burden of financial obligations you may leave behind. You also can use it to provide for someone you love or make a charitable gift.

4. I Don’t Need a Policy Because I Have One Through My Employer

Employer provided policies are a good start to coverage, but they can be limiting. For example, your death benefit may only be 1 or 2 times your salary. Additionally, some employers only offer accidental death policies. This will mean that your loved ones will get paid only if your death is the result of an accident. Your policy may also only be a burial policy. Which is meant to cover expenses of your final interment. These typically have a very small death benefit. You also need to find out if you can keep the policy if you change employers. Many policies are non-transferable. With all of those considerations, many people often find that an employer offered life insurance policy is not enough to meet their needs.

5. A Stay at Home Partner Doesn’t Need Life Insurance

Though a stay-at-home partner may not bring in a paycheck, they still provide valuable services. They may provide childcare and domestic services. If they pass, life insurance can help cover the costs of replacing these services.

6. I Can Only Take a Policy Out on Myself

You are not the only person you can take a policy out on. You can also take out policies on your spouse and/or children.

7. Death Benefits Are Subject to Taxes

One of the common life insurance myths is that your family will have to pay taxes on death benefits. This is not true, death benefits are tax free.

8. I Won’t Qualify Because I Have a Pre-Existing Condition

Some life insurance companies offer policies to those with pre-existing conditions. However, you are likely to pay more of a premium since you are a higher risk.

9. My Policy Can’t Be Changed Once It’s Issued

Once your policy is issued you will have some flexibility to make changes without taking out a new policy.

10. I Don’t Need Life Insurance If I Have Savings

It is good to have a savings and that can help to care for your loved ones. But savings can be spent down quickly and life insurance adds a cushion.

Debunking Life Insurance Myths

Debunking life insurance myths can help you when shopping for a policy. Meet with a qualified insurance agent who can help you navigate the field.

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