Will your children, spouse, or any of your loved ones have the finances necessary after your passing? Life insurance is a subject many avoid discussing. However, by doing this you’re setting yourself up for failure! There are many myths that stop individuals from taking the step of purchasing a policy, along with uncertainty. However, you leave your children, spouse, and other loved ones in danger by not having some type of policy.
So, let’s debunk the most common myths individuals have about life insurance coverage.
1. Life Insurance is too expensive
False. Life Happens and LIRMA found that 25% of Americans are very much aware that they need more life insurance, but only 10% planned to get more of it within the next year. And this was greatly due to them believing that it would be very expensive, with 80% overestimating the price of a life insurance policy.
The truth: Average costs will differ based on a number of variables and each individuals’ unique situation. According to Trusted Choice, a female who’s around the age of 35 and is a healthy non-smoker would pay an average of $61 per month for $1,000,000 worth of life insurance with a 20-year term, and $23.90 per month for $250,000 worth of coverage for 20 years.
Not bad right?
2. My health disqualifies me from life insurance
There are many companies that cover a variety of health conditions, with some even specializing in those areas. Actually, some policies don’t even involve medical underwriting!
However, if you do have a health condition, just be sure to remember that it may cost a little more and have coverage limitations. But, it still isn’t stopping you from signing a policy!
3. I’m too young for life insurance
The opposite is true. It makes sense to get it while you’re young since the premiums for young adults tend to be a lot less expensive. Plus, you have very few or no assets.
By waiting longer, you’re increasing the chances of having to purchase lie insurance when you may develop a medical condition, which will make it more expensive.
Or the opposite may happen. Things not only happen to adults, but tragic events can especially happen to younger people.
By the time you need life insurance, it may be too late.
4. My term life insurance at work is sufficient
This may or may not be true. Like all insurance policies, each situation is unique. However, if you have a spouse or any other dependents, additional coverage may be necessary if it doesn’t meet your needs.
Take all things into consideration.
5. Single and no dependents = no coverage
This is far from the truth. Everyone needs to get a life insurance policy for the minimum amount it will take to cover personal debts, medical and funeral costs.
Not having this coverage may cause a huge burden on family or your executor due to them having to pay for your expenses.
Also, it’s always nice to not only make sure that your debts are covered, but to leave something behind for loved ones in assets.
6. I should always buy term and invest the rest
This isn’t entirely true. While there are obvious differences between term and permanent life insurance, the cost of term life insurance coverage can easily sky rocket in later years for you.
If you know for a fact that you must be covered at death, we urge you to strongly consider permanent life insurance coverage. Besides, the total premium expense for permanent coverage may be less expensive than continuous premiums that may even have a less expensive term.
7. Only the breadwinner in our household needs coverage
We hate to think about the possibility of death or injury in our life, but you need to. What if something was to happen to stay at home spouse? Then what? The cost to pay someone for the services they provided such as; cleaning, watching the children, cooking, etc. can become really expensive. Also, wouldn’t you want to be able to take time off of work to cope with the loss and help others get over the loss as well? Well, that insurance coverage can definitely give you the funds to be able to take time off of work.
8. I’m better off investing my money than buying a life insurance policy
You need to realize that you’re taking a huge chance if you strictly rely on investments early on in your life. This risk becomes even more prodigious if you have dependents. Your assets can easily depreciate when you pass away, and that’s not a good thing for any dependents you may have.
Now, if you have $1 million or above in assets, then you can consider whether or not you want coverage, although we still recommend it.
9. I should always purchase the Return-Of-Premium Rider on any term policy
There are a variety of ROP riders available to you. However, a smart financial planner will tell you that it isn’t worth the additional fee and should be avoided. Of course, the choice is yours and it all comes down to your risk tolerance and end goal you are seeking for your investment.
10. The cost of my premiums will be deductible
This is definitely not true. At least in most cases it isn’t. Personal life insurance is never deductible unless you are self-employed and you utilize the coverage as asset protection.
Wrapping it all up
We are almost certain that at least 1 of the myths we just debunked is something that you took to be true at one point. Life insurance can be complicated, since there are many different kinds, and the expense all depends on your situation. However, it is a long term investment that requires you to sometimes ignore the price paid, and think about how much of a benefit it will be for you, and your loved ones when the inevitable happens.
If you are at all interested in learning more about a life insurance policy, or have any questions after reading this, please feel free to give us a call at 217-345-7063 and speak with one of our experts to discuss some options that may be best for you and your unique situation.