Like life itself, life insurance can be confusing. Some decisions are really hard to make, and we put them off. Should you buy life insurance? If so, what kind? If you have a policy through work, should you bother with buying additional coverage? A lot of variables go into being able to answer these questions. Taking a look at some of the more common misconceptions about life insurance is a good way to start.
Myth One: If you’re single with no dependents you can skip coverage.
Wrong. Even a single person has expenses that will need to be paid for, and life insurance can be an easy way to cover personal debt, end of life expenses and more. Also, it’s a good opportunity for a person with no dependents to leave something to a favorite charity or cause.
Myth Two: If you are provided life insurance through work, you don’t need more coverage.
That’s not necessarily true. If you aren’t married, don’t have dependents and earn a small salary, you might be fine without additional coverage. However, extra coverage would be helpful if your dependents will need to pay estate taxes, for instance.
Myth Three: Only the breadwinner in the family needs life insurance coverage.
Even if you aren’t the main wage earner or are a stay-at-home parent, your spouse may need help with paying debt down or hiring services you’re not there to provide anymore, like daycare, housecleaning, cooking and other valuable but costly household necessities.
Myth Four: Term life insurance is all you need.
Term life insurance, which provides coverage for a set number of years, is especially appealing to young families because it costs less. It can be helpful if you believe certain financial needs, such as paying off a mortgage or a child’s college education, will go away eventually. In some circumstances, whole life insurance would be better, because it covers a person for their entire life and builds value over time. Read more about the different kinds of insurance here.
These are just a few of the myths about life insurance coverage. Learn more before you decide which kind of coverage and how much would be best for you and your family. When you’re ready to take the next step, our quote comparison tool can help.