Did you know that in 2020, more than half of all Americans were covered by some form of life insurance?
If you’re one of the 46% that don’t have cover then you may be considering changing that.
You might be put off by some of the things that you’ve heard about life insurance, however.
Read on as we debunk some of the most common life insurance myths to help you make an informed choice.
1. I’m Single and Have No Dependents So I Don’t Need It
If you’re single and don’t have any dependents, then you may think that life insurance isn’t really necessary. After all, who is really going to benefit?
However, life insurance doesn’t just impact close family members. If a parent or guardian co-signed on a loan or mortgage, for example, then after your death, they would become liable for that debt. Life insurance would help to ensure that you leave this world debt-free and don’t burden anyone else.
It can also help you to leave a legacy for other family members such as nieces and nephews, or a godchild.
2. I’m Not the Breadwinner So I Don’t Need It
If you’re not the main earner in your family, then you might think that you don’t really need life insurance. After all, your partner’s source of income will still be there when you’re gone.
If you believe this, then you’re definitely selling yourself short! Think about everything that you contribute to the relationship, from cooking and cleaning to childcare. If your significant other is going to keep working then they will need to find a way to replace all these services, and that’s going to cost a significant amount of money.
Life insurance ensures that if the worst happens, your partner will have the financial backing to keep working and living comfortably.
3. Life Insurance is Too Expensive
One of the most common reasons that people don’t take out life insurance is that they think it’s going to be too expensive. In fact, 44% of millennials overestimated the cost of life insurance by up to six times!
The truth is that there is plenty of affordable life insurance out there. Companies such as freedominsurancefinancial.com can offer policies that won’t set you back much more per month than a typical video streaming subscription.
4. I Can’t Get Life Insurance With a Pre-Existing Condition
Many people wrongly believe that if you have a pre-existing medical condition then you won’t be able to take out life insurance, since this will dramatically increase your risks in the eyes of the insurance companies.
In fact, this isn’t true. There are specific policies you can take out if you have certain conditions such as cancer or diabetes although understandably your premiums are likely to be higher. If you’re over 40 you can also take out guaranteed issue life insurance which you can buy regardless of any pre-existing conditions.
It’s always worth talking to an insurance broker if you do have a medical condition as they will be able to help you to find the best type of insurance for your needs.
5. I Don’t Need Life Insurance if I’m Young
When you’re young, fit, and healthy, life insurance may feel like paying for something that you’re never going to need.
There are a number of benefits to taking out life insurance when you’re younger, however. One of the biggest is that you can lock in extremely low rates by taking out a policy when you are younger. You’re also protecting yourself from having to pay higher premiums if you do develop any medical conditions later in life.
Investing in life insurance when you’re young is a great investment in yourself.
6. It’s Better to Just Invest the Money
You might be thinking that you’d be better off just investing the money you would be spending on a life insurance policy and using the returns of those investments to cover any costs when you pass on.
Whilst this may seem like a sensible idea, it is ignoring one important fact: none of us can predict how long we will live. Investments are intended to grow over time. If you invest over the course of a long life you may end up with a good sum upon your passing. However, when you first start investing, that sum will be very small.
The best insurance policy will be ready to pay out from the moment you take it out. That means if you were to take out the life insurance policy today and pass away tomorrow, you would receive the full benefit of the life insurance.
7. I Have Sufficient Cover Through My Employer
Many employers will offer life insurance as part of their benefits package. If this is this case, you may feel you don’t need a standalone life insurance policy.
Firstly, life insurance through your employer may only cover one or two times your salary. Experts suggest you should aim for at least ten times your salary. In addition, many employee policies are non-portable. That means if you move to a different job, you may lose your coverage.
You can always take out a separate life insurance policy that complements that offered by your employer insurance.
8. My Beneficiaries Will Need to Pay Income Taxes
Another concern that people have about life insurance is that their beneficiaries will be left with hefty tax bills when they receive their money.
Most life insurance benefits are income-tax-free meaning that your beneficiaries won’t need to pay income tax on the money they receive or report the payments on their tax returns. There may be some tax on any interest payments, however.
Don’t Believe These Life Insurance Myths
Now that you know the truth about these life insurance myths, we hope you will begin to understand the importance of getting life insurance, regardless of your personal situation.
Like every form of insurance, life insurance is something that you hope you won’t need to use, at least for many, many, years. If the worst happens, however, it can make a huge difference to the lives of those you leave behind. As we’ve seen, life insurance won’t break the bank, so there’s really no reason why you shouldn’t at least be considering taking it out.
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