News - Dangerous Life Insurance Myths
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7 Jan 2015Life insurance is like what it is for the foot ball player in the wrestling filed, in world of financial planning. As one of most people’s least favorite financial topics, it gets no respect. When people think of a life insurance agent, they think of someone like another sales person.
Yet, it’s something that almost everyone needs and not having it when you need it can be devastating to your family’s well being. Here are some of the most common and dangerous myths about this often misunderstood product:
Your employer-provided life insurance is all you need.
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 there are several problems with that. First, your “salary” doesn’t typically include commissions, bonuses, and second incomes. Second, to replace your income for dependents, you generally need at least 10-12 times your income recommends by experts.
Even if you do have enough insurance through your job, you may lose it when you leave. You may be able to convert your optional insurance to an individual policy or purchase one on your own but either way, it may be much more expensive than purchasing a policy today, especially if your health deteriorates.
Only the breadwinner needs life insurance
“Imagine if something were to happen to the stay-at-home spouse in your family. The breadwinner may need to hire someone to clean and take care of the kids and that can cost a lot of money. Unless your family would have that extra income to spare, You should have life insurance on both spouses,” Life 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.
Everyone should buy term and invest the difference
While this generally makes sense for most people, a permanent policy can be a better deal if you need life insurance for your entire life. Some examples would be to provide for a special needs child like his eductation, marriage, and business etc at regular intervals.
You get a better deal purchasing life insurance online
“The Internet can be a great place to research life insurance and find an agent but you actually pay the same price whether you purchase a policy online or through a human being,”
“What you don’t get online is the personal service that can help you figure out how much you need, which company is likely to give you the best price based on your health situation, and what the terms on the application mean.
A web site may not realize that you need coverage for your whole life due to a child with special needs or that your 1health won’t qualify you for the rates offered by the lowest price company. Most importantly, a commission-motivated agent can help motivate you to actually get the policy as it’s something very easy to procrastinate.”
You’re too young to worry about life insurance
Life insurance actually makes the most sense when you’re young since the premiums are less expensive and you have fewer assets to pass on to heirs. The longer you wait, the more expensive it will tend to be and the more likely you are to develop a medical condition that makes it much more expensive. Of course, the biggest problem with procrastinating life insurance is that by the time you need it, it’s too late to get it.
Every person’s situation is unique. Whatever decision you make when it comes to life insurance, just be sure it’s an informed one. After all, if something does happen to you, you don’t get to come back and inform the loved ones for whom the Insurance is bought, underlying objective.
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