Have you ever fallen for the myths floating around about life insurance? We’re busting them here.
One of the most challenging aspects of financial planning is life insurance. Unfortunately, people tend to ignore life insurance until it gets too late. That said, life insurance is something of extreme significance, and not having a policy can put you and your family members in a lot of trouble.
Here are some of the most common myths about life insurance that most people fall for.
- Employer-Provided Life Insurance Is Sufficient for You
The life insurance plan provided by your employer is one or two times your actual salary, which is pretty convenient. However, there are various problems attached to it. First of all, your salary doesn’t include second incomes, bonuses, and commissions. Secondly, it will take at least 4 to 5 times your income to cover your loved ones after your death. Regardless of how good your insurance plan is, it will be gone once you resign. Although you have the option to convert this policy into a permanent one, chances are that it will be too expensive. The best option is to get an individual insurance plan for your loved ones.
- Only the Bread Earner Requires Life Insurance
If something bad happens to your wife or one of your kids, you, the sole sustainer breadwinner will have to hire someone to look after your sick spouse and run errands which will be pretty costly. Unless you have enough disposable income, you will need a life insurance plan to help your loved ones make it through.
- It is Costly
Studies have shown that a majority of young Americans are in favor of life insurance but only 10% of them invest in a life insurance plan. The main reason why most people delay or avoid life insurance is that they believe it is too expensive. More than 60% of people say that it is too costly, and more than 80% simply overestimate the cost. Contrary to popular belief, life insurance isn’t that expensive, and getting one can benefit you and your loved one in the long run.
- “I’m Not Healthy Enough“
In a majority of life insurance companies, you can get coverage for your health conditions, and some of them even specialize in cases involving high risk. Furthermore, you have the option to go for a policy with no medical underwriting. The only problem is that these policies are more expensive than the rest.
- Term Life Insurance Is Better
A term life insurance may work for most people, but permanent life insurance can be better if you think in the long run. The perfect example would be paying for estate taxes, or helping a child with special needs. If you require life insurance, have a higher tax bracket, and have benefitted from your tax-advantage options, you can benefit from the cash value.
- You’re Too Young For Life Insurance
Contrary to popular belief, seeking life insurance in your earlier years is good, for you don’t have to pay higher premiums. The longer you wait, the costlier things will get. The worst thing about delaying life insurance is that if you get it later in life, you won’t be able to benefit from it.
Life insurance is the best way to provide financial security to your loved ones. The sooner you get it, the better off you’d be. If you want to benefit from a life insurance plan, make sure never to buy into any of the myths mentioned above.
