There are many misconceptions about life insurance that leave many individuals without coverage or not enough coverage. We have compiled a list of common life insurance myths and dispelled them in order to provide proper information for the public.
Life insurance policies are for the old, or for people with families. It is never too soon to think about life insurance and the benefits it provides to your loved ones long after you are gone. Even if you do not have a spouse or children, life insurance can help your surviving family members cover the costs of funeral and burial expenses or pay off any of your student loans or outstanding debt.
My employer paid life insurance policy is enough. Often times, employer-paid life insurance provides coverage up to 1x your salary. Additional coverage may be purchased through your employer for a small fee. This additional coverage, although affordable, may be restricted to 5 or 6 times your salary – which may not be enough. Also, if you were to leave your company, most insurance providers will allow you to convert the additional coverage into an individual policy, but you will be out the coverage that your employer was paying for.
Additional life insurance is too expensive. Surprising to most, life insurance is actually pretty cheap when you consider the benefit that can be provided. For a 35-year-old, nonsmoking female, a $250k 20-year term policy would run around $24 a month and a million-dollar 20-year term policy would only be about $60. For some, this may be a lot less than we spend on coffee each morning.
My health disqualifies me from getting a life insurance plan. This is another major falsehood that people choose to believe because it alleviates the blame for not enrolling. There are many life insurance carriers who will provide policy options for those with a pre-existing condition or without requiring a medical exam. Your coverage level may be limited but providing your dependents with something is better than nothing.
Only the “breadwinner” needs life insurance. Just because one person in the household is the sole financial provider or the larger financial provider, does not mean that the other spouse should go uninsured. Think about how your family will be able to cope financially without your contribution – whether it’s a drop in monthly earnings or suddenly having additional expenses (like child care).