Even though life insurance can provide protection that survivors need—sometimes desperately—many shy away from it. Some just don’t want to think about their own death, but many avoid even looking into it because of misunderstandings and confusion about life insurance.
Let’s take a look at some of the most common life insurance misconceptions.
- Life insurance isn’t important if you’re young and single.
In reality, getting a good life insurance policy when you’re young makes a lot of sense, even if you don’t have dependents. Premiums cost less when you’re young, and if you wait until you’re older premiums will likely be more expensive. Also, your premiums will be higher if you wait and develop health issues before you purchase. If you die without dependents, your insurance can cover your debts, medical expenses and funeral costs your family might otherwise be responsible for.
- You don’t need it if you have life insurance through your employer.
A policy provided by an employer is temporary and typically, should you die while covered by it, the benefits won’t be as much as you may need. While an employer usually provides a life insurance policy that equals one or two times your annual salary, it may not be enough. Generally sufficient coverage is for anywhere from five to 12 percent of your annual income. Consider supplementing your employer-provided insurance with an individual policy.
- You can’t really afford life insurance because it’s expensive.
Most people imagine that life insurance costs more than it really does. According to Forbes, while 80% of participants in a study overestimated costs. Twenty-five percent assumed a 20-year term policy for a healthy 30-year-old would be about $1,000 a year when it could actually cost around $150.
- Your health and older age would disqualify you for life insurance.
Although probably more expensive, a lot of providers will cover a variety of health conditions and some actually focus on high-risk policies. Some policies aren’t medically underwritten. As for age, some companies do offer coverage to seniors; the healthier and more active you are, the less you will need to pay.
- You don’t need life insurance if you’re not the main income earner.
If you’re a stay-at-home parent or spouse you make a valuable contribution to the household that would need to be paid for otherwise. Death benefits would cover these extra expenses.
Regardless of your age and circumstances, life insurance may be a wise and even necessary purchase. Find out more, get a quote and speak with an agent about whether a policy makes sense for you.