Myth #1: Life insurance is prohibitively expensive.
Here’s the thing: life insurance isn’t as expensive as you would imagine. It costs under $100 each month. When you check costs between carriers, you’ll notice that the average charge is roughly 2% of your annual wage. This means that if you make $50,000 per year, you may pay up to $500 per year merely to get the peace of mind with life insurance coverage.
Obviously, not everyone requires such extensive coverage. For example, someone making $25K would probably be happy spending $250 per year. On the other hand, anyone earning more than $75,000 should strongly consider purchasing supplementary coverage. After all, if something happened to them, their family would be unable to live comfortably.
Myth #2: Obtaining life insurance is difficult and time-consuming.
Unlike items purchased and paid for monthly payments, life insurance is something bought and hoped never to use. Nonetheless, it can provide a lot of tranquility. Life insurance is simple to understand, but some terms and criteria must be completed before an application is granted.
Life insurance provides a death benefit to your loved ones if you die. The death benefit is paid for with a monthly premium, which is determined by a variety of variables (type of life insurance, your age, health, location, and more). In the event of your death, your loved ones will get a death benefit payout from the insurance provider as long as you pay your monthly premiums and your current policy term.
While many typical types of life insurance necessitate a medical exam or access to your medical records, “no exam life insurance policies” can provide you with coverage in as little as a few minutes.
Myth #3: Obtaining life insurance requires a medical checkup.
There is no medical checkup required to purchase life insurance. This is known as “no-medical” or “straight application,” and it is the quickest way to apply for life insurance. However, you must be cautious because not all firms provide this option. If your health isn’t excellent, you might wish to postpone your application until after your yearly physical.
Many life insurance policies require you to take a medical exam as part of the application process. The insurance company must know about your health and medical history to compute your life insurance premium and rate. The good news is that life insurance policies allow you to skip the medical if you don’t want to be poked and prodded by a stranger or just don’t have the time.
Myth #4: You can’t receive insurance if you have a pre-existing medical issue.
You can, but it may be more expensive because insurance companies may see you as a higher risk, and the number of providers willing to cover you may be limited. Everyone who applies for life insurance is evaluated on an individual basis. Therefore it depends on your specific circumstances.
Some pre-existing ailments may not affect the cost of life insurance, but more severe conditions, such as heart disease or cancer, may make it difficult to obtain a competitive rate.
It is critical to notify your provider if you have a pre-existing medical condition so that they can assess your risk and chances of claiming. This will help them determine how much to charge for insurance and whether or not to give you a policy.
Myth #5: Life insurance is only for married people with children or dependents.
When people are married with children, it is evident how the death benefit will be used. The funds will be used to maintain their household and assist them in adjusting to life without them.
When you’re single, it’s not the same. There are numerous reasons why you might purchase life insurance if you are single, and your single life policy death benefit can be used in a variety of ways, including:
Funeral expenses: even if you don’t care much about what happens after you die, your loved ones are likely to desire a funeral or remembering service).
Private student debts: When you die, your federal student loans are normally canceled, but your private student loans may not be.
Credit card debt: Your family may be saddled with your credit card balances after you pass away.
Future health issues: If you know you have a family history of chronic problems and may be affected later in life, you should obtain life insurance today – the younger you are, the lower your rates will be.
Myth #6: If you are a stay-at-home parent with no income, you do not need life insurance.
Life insurance is required for anyone who makes a financial contribution to the home or whose death would place a financial strain on the surviving members of the household.
If your spouse is the principal breadwinner, they will be responsible for repaying any debts incurred during their marriage.
If this occurs and they die before paying them off, the surviving partner may have financial difficulties; therefore you must ensure that they are taken care of.
Even though they do not earn a living, stay-at-home parents should obtain life insurance coverage since the surviving parent must pay for child care given by a stay-at-home parent, and a life insurance payment may allow the remaining parent to take a few years off work.
Myth #7: If you have work-provided life insurance, you don’t need private life insurance.
Other sources of income for spouses who work outside the home include Social Security Disability Insurance payments, retirement savings accounts, pensions, annuities, investments, and so on. A loss of income may impact these types of assets as a result of a significant health problem or the premature death of a spouse.
Suppose this is the situation for you and your spouse or domestic partner. In that case, it may be time to reconsider if your present level of protection is appropriate because when one spouse or parent becomes ill or dies, the amount of money available to pay bills, buy food, and so on will undoubtedly change. Basic employer-sponsored life insurance is frequently low-cost or free, but the face value of your policy is most likely insufficient.
You will almost certainly require coverage worth at least six times your annual wage for dependents who rely on your income (some people recommend 10-12 times your income).
Myth #8: You do not need life insurance if you are young.
There is no set age for purchasing life insurance. For many people, the age at which they acquire their first home is the age at which they obtain life insurance because most mortgage lenders require you to have life insurance to purchase a property. Suppose you have a spouse or family member who is financially dependent on your salary. In that case, life insurance is an excellent option because losing your income can place them in a terrible financial situation.
Remember that life insurance is designed to safeguard your loved ones; if you die unexpectedly, it can help pay off your debts. Life insurance is a sensible option if you have a mortgage or dependents because accidents happen.
Myth #9: You can’t acquire insurance if you’re “too old.”
While receiving life insurance coverage as a senior is more complex, it is not impossible, especially if you have health problems. There are several life insurance coverage alternatives for seniors, whether you wish to leave a lump sum for your family or cover final expenses. However, it is critical to confirm that you require life insurance. You may not need coverage if you have no debt and have savings or finances for final expenses.
And if you do need coverage, a term life insurance policy may be a good option if you are in good health for your age and willing to take a medical exam, because it can be used to cover debts, such as a mortgage, or provide financial support for a spouse or dependent if you die during the policy term.
Myth #10: Life insurance is a waste of money.
The answer is dependent on how you define “investment.”
If we define investment as purchasing something that will grow in value over time and provide income to your successors, then life insurance is not a good investment.
However, life insurance can be an outstanding investment vehicle if you look at it from a different angle, such as purchasing assets with cash flow or liquidity.
Insurance firms have excess earnings after covering their estimated operating costs and claims, they pay dividends to whole life insurance policyholders. This is not an investment but an additional way for whole life insurance policies to pay off.
Whole life insurance features a tax-deductible cash value component.
This cash value is a key component of the insurance since it can be used to pay for a house, college, business expansion, or to supplement your retirement income – and it is tax-free if you do not remove more than you put in.
