Michael Wood | Life Insurance: Myths and Facts

MICHAEL WOOD—Getting life insurance is one of the most important decisions you can ever make. Sometimes, a policy may seem expensive, or you may think your employer’s plan is enough. But you need to consider again.

 

As death is such a hard concept to understand or contemplate, most people don’t consider life insurance as vital in their lives. Typically, they have an aversion to matters associated with the demise of a loved one. Though majorities of us think that life insurance is important, usually we put off the buying decision. Consequently, we end up not prioritizing this requirement.

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However, putting off nonpalatable topics helps to propagate myths. For this reason, this post highlights five of the most prevalent myths associated with life insurance as well as the truths.

 

Myth # 1: That an Employer’s Life Insurance Plan is Adequate

 

Fact: Typically, an employer provides insurance policies are one or two more times equal to your salary. Independently, you have the option of purchasing coverage that is six or seven times more than what your employer provides. However, salary deductions leave employees with a significantly less gross income. Also, there are limitations on the types of coverage you can retain if you choose to retire.

 

Keep it in mind that if you choose to retire, you might obtain extra coverage in which you contract as a client with an insurer independently of your employer. An advantage of this type of coverage is its portability when you switch employers. Estimates indicate that you will need between five to twelve times your present salary to cover your dependents’ needs. Also, converting an employer’s policy to an individual plan is more expensive down the road. This is especially true if you have any outstanding health conditions. Accordingly, you should consider any employer-provided insurance as a plus.

 

Myth #2: I am Not the Breadwinner, I Don’t Need Insurance

 

Fact: A common assumption is that insurance is for the proverbial breadwinner with the implication that once a breadwinner is gone, the family can continue enjoying sustenance. However, the loss of a breadwinner means that most families have to look for alternative sources of income. Having life insurance is important as it ensures continuity. Despite this widespread assumption, live at home spouses contribute to the well-being of the family. In a family where a low-income spouse has life insurance, main breadwinners have time to spend with their children as well as opportunities to assist during tragedies.

 

Myth #3: Life Insurance is Expensive

 

According to the Life Insurance and Market Research Association (LIMRA), 80% of individuals underestimate their life insurance needs. Why this trend? Because life insurance providers use factors such as your overall health, your age, social habits, medical, and family history to determine premiums. As a result, you get to pay lower premiums the younger and healthier you are.

 

Myth # 4: I Am Young, Why Worry About Life Insurance?

Fact: contrary to this assumption, getting life insurance when you are young makes a lot of sense. Why? Premiums are typically cheaper in your younger years. Conversely, old age and long-term medical conditions make it challenging to obtain vital life insurance. Logically, you should consider having life insurance if you have dependents to take care of in case of your demise.

 

Myth # 5: Term life Insurance is Sufficient for Me

 

Typically, term life covers individuals in the 75 to 80 age bracket. Moreover, term life premiums increase every ten years, so with time life insurance, you end up paying more. On the other hand, permanent life policies pay off in the event of your death as well as having fixed premiums no matter your age. Ideally, you should combine temporary and permanent life insurance policies. This is why you need to consult an advisor to identify the right life insurance product for your unique needs. For more information, talk to a financial professional like Michael Wood at Integrity Retirement Planning. A financial planner can help you make the right decision about your retirement and guide you to the right path.