Dispelling 7 myths about buying life insurance
Life insurance is one of those things we just don’t want to think about. It’s an uncomfortable reminder that life will end. There are many reasons why people put off buying life insurance, but most of them are more myth than fact. Today, we want to dispel some of the more popular “myths” that keep people from protecting their loved ones like they should.
Myth #1: I’m too young to need life insurance.
It’s easy to think you don’t need to worry about life insurance in your 20s and 30s, but nothing could be further from the truth. “Every single person needs at least enough life insurance to cover the costs of personal debts, medical and funeral bills. If you are uninsured, you may leave a legacy of unpaid expenses for your family,” according to Investopedia.
A policy could help your loved ones pay off any debt you owe, including college loans. Besides shielding your family from unnecessary debt, purchasing a policy at a younger age means you will probably pay less for premiums, since you may not have many assets and are less likely to have developed chronic health conditions. By putting off buying life insurance, you’ll only end up paying more.
Myth #2: I have employer-provided life insurance so I don’t need anything else.
Some employers provide life insurance coverage as part of their benefits package, however the amount is generally not enough to adequately support your family. How much more could you need? According to a Forbes article, “Your employer may provide you with life insurance equal to 1-2 times your annual salary, and you may even be able to purchase up to 4-6 times your salary but … to replace your income for dependents, you generally need at least 5-8 times your income and some experts even recommend 10-12 times.”
One other thing to consider is that employer-provided policies are often tied to a specific job, so if you leave that company, it’s difficult to take the policy with you. Getting the policy changed to individual coverage may be more expensive, and depending on how old you are, the cost could be much greater than if you’d purchased a policy on your own.
Myth #3: A stay-at-home spouse doesn’t need life insurance.
Another myth about life insurance is that families only need a policy for working spouses. Stay-at-home moms and dads provide childcare, transportation, cleaning, cooking, grocery shopping, and a myriad of other things. Without her or him at home, the breadwinner would probably need to pay someone else to do those things and those costs can really add up. Daycare, for instance, is very expensive. “Insurance on the stay-at-home spouse also gives the working parent the opportunity to take time off work and help the family adjust to their loss,” according to Forbes.
Myth #4: I can’t afford life insurance.
One very persistent myth about life insurance is that it’s expensive, but that’s not always the case. A 2015 Insurance Barometer study by Life Happens found that 80% of people misjudge the cost of term life insurance. Many end up thinking they can’t afford it, even if they want to purchase or increase their coverage. In truth, buying a life insurance policy can be quite affordable. The key is to lock in your coverage at an earlier age when you have fewer chronic health issues.
Myth #5: I have poor health, so I don’t qualify for life insurance.
Many believe if you’ve had a health condition such as a heart attack or cancer, you can’t get life insurance. At one time this was actually true, but due to medical advances and education about the importance of lifestyle changes in controlling and reversing some chronic conditions, people are living longer. You can also find companies that will cover a range of what might be considered “high risk” conditions.
Myth #6: My beneficiaries will end up paying taxes on proceeds from my policy.
In most states, life insurance death benefits are income-tax-free and will not have to be reported. You can then use those benefits to pay funeral expenses, your mortgage, other debts or college tuition for your children.
Myth #7: I have enough retirement savings for my family to live comfortably.
Planning for retirement is one thing. Paying final expenses is quite another. According to the National Funeral Directors Association, the national median cost of a funeral with a burial in 2014 was over $7,000. That is quite a large amount, and if your family doesn’t have enough saved up, they could have trouble paying your final expenses.
The idea of buying life insurance can be difficult to face, but protecting your family financially is extremely important. Separate myths from facts so you can safeguard your family. If you have any questions and are looking for answers, contact Avante Insurance today.