There are many misconceptions about life insurance. These preconceived notions can be costly at a time when your family needs the resources and finances to keep going after you are no longer around.
Here is a list of five misconceptions surrounding life insurance:
- I’m single and don’t have anyone depending on me. You still need to be able to cover your funeral expenses, any outstanding debts, or outstanding medical bills in the event of your death. Even though you don’t have anyone to leave your policy to, you could leave the proceeds to a favorite charity after your final expenses are paid.
- Only the breadwinner needs life insurance. This is one of the most common misconceptions. A stay-at-home mom or dad is not easily replaced. The expense of replacing someone who takes care of the kids, house work, upkeep on the home, and all the many other tasks that go with someone who is staying at home while the other person goes to work can be significant.
- I can take what I save on life insurance and invest it. You need to make sure you are covered until you reach a breakeven point in your finances. And that amount is different for each individual. Is it really worth the risk to depend on your investments in your early years.
- I only need twice my annual salary in life insurance. This depends on the individual. How much debt will be left behind? Is your mortgage paid off or do you still owe a significant amount? All these things and more need to be taken into consideration when deciding on a life insurance policy coverage amount.
- Some financial “experts” say to buy only term life insurance and invest the difference. Again, it depends on your individual circumstance. If you know without a doubt you will need permanent coverage, then a term policy will not work for you since term insurance is for a specified period of time.
The best way to find the right policy is to sit down face-to-face with your local agent to discuss your needs.