subject: Fallacies And Mistaken Notions About Life Insurance [print this page] Fallacies And Mistaken Notions About Life Insurance
Many consumers buy life insurance coverage they don't need, and thus pay more than necessary. Others avoid the issue entirely for an assortment of reasons. Still others assume they have no need for coverage based on circumstances surrounding their lives. Many of the justifications that form these decisions are innaccurate. Many of us get so many signals on issues like these that we get overwhelmed.
We'll address this issue below. We'll debunk some of the most popular (and incorrect) notions about life insurance coverage. You may discover one or more fallacies in the list below that you have considered true until today.
#1 - My Lifestyle Makes Life Insurance Too Expensive
Do you smoke on a regular basis? Are you overweight? These and other health-related factors will likely result in higher rates, but not as high as you might presume. Insurers charge higher premiums to those who make lifestyle choices that negatively affect their health. But the effect is less pronounced with a term life insurance policy.
Also, keep in mind that insurers compete aggressively for your business, regardless of whether you are a habitual smoker or overweight. Competition among them results in lower premiums.
#2 - I'm Already Covered Through Work
Many employers do indeed provide life insurance coverage for their employees. Most times, however, the coverage amount is minimal. Have you assessed whether the amount your family would receive in the event you passed away is adequate? Most consumers would be forced to answer no.
Calculate your life insurance needs online. Then, check your employer's policy to identify how much it will pay. If there is a coverage gap, buy more.
#3 - I Don't Have Any Children
Suppose you are unmarried, and have no children. At first, this seems to be a circumstance in which you have no need for life insurance coverage. But look more closely. Do you have any outstanding debts, including a home or auto loan? Do you have funds set aside to pay for funeral expenses? Most people lacking families or dependents discover they need a small term life policy to cover their financial obligations.
#4 - I'm Not Going To Die Anytime Soon
The purpose of insurance is to cover financial losses that result from unanticipated events. While the likelihood of a young person passing away prematurely is small, such a tragedy is always possible. Term life insurance would guarantee that the people you leave behind would have the financial resources they need to survive in your absence.
It's also worth noting that a young person lacking preexisting conditions will typically pay much less than an older person in the same shape. Here, due to age alone, coverage comes at a low price.
#5 - My Kids Are All Grown Up
Your children may have left the nest, but there might still be several reasons to invest in a life insurance policy. For example, is your mortgage paid off? If not, do you have sufficient funds set aside to do so? Does your spouse currently rely on any portion of your income? If so, your absence may create a gap that impacts his or her standard of living. In such cases, coverage is essential.
#6 - Life Insurance Is Too Expensive
Some types of life insurance are more expensive than others. An example is whole life. This type of policy contains a cash accumulation component that increases the amount paid for the coverage extended. Another noteworthy fact: those who opt for a whole life policy are excluded from having to take a medical exam. This is a good sign that the premiums are high.
By contrast, a term life policy is affordable. There is no cash value element, and thus you'll pay much lower rates for more coverage. Also, these policies can be purchased for different durations, giving you the flexibility to better manage your insurance needs as your life changes.
Take the time to review how much life insurance coverage you and your family need. There are easy-to-use calculators for doing so online. Taking an objective approach is wise when considering life insurance coverage. Once you've defined your needs you can make an educated decision by comparing competitive insurance quotes..
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