Many of us let popular misconceptions about life insurance convince us that we don’t need it. Read on to see how seven of the most widespread life insurance myths are easily debunked.
Myth #1: I’m single and I have no dependents. I don’t need life insurance.
Actually, you do. Every person should have funds to cover their funeral costs and end-of-life medical bills. Also, you can leave a legacy by choosing a cause to be the beneficiary of your death payout.
Myth #2: I’m a stay-at-home parent who doesn’t earn an income. My partner needs life insurance; I don’t.
The tasks that currently fill your time will need to be outsourced to hired help should you suddenly pass on. Nannies, cleaning help and cooks cost money. That money can come from the insurance payout of your homemaker’s policy.
Myth #3: Why would I waste money on insurance when I can invest it to earn higher returns?
You’re better off putting your money somewhere safe with a guaranteed payout – like a life insurance policy. You don’t want to leave your dependents with an iffy source of funds when you pass on. The only exception to this rule is for the truly wealthy, who have more than $1 million in liquid assets and already have their funeral costs and medical bills covered.
Myth #4: I can’t afford life insurance.
A recent Life Happens study revealed that 80% of uninsured people who claimed life insurance is too expensive, had overestimated its cost. In fact, a 20-year level term policy for a healthy 30-year-old usually falls in the ballpark of just $150 a year.
Myth #5: I’m too young to worry about life insurance.
Actually, there’s no better time to purchase a life insurance policy than when you’re young. The premiums are far less expensive for those under age 35, and most people in that stage of life do not have sizable assets to pass on to their dependents. Most importantly, dependents of the 25-35 age group will be too young to be financially independent and will need the death payouts for basic survival.
Myth #6: My children are independent adults. Why would I need life insurance?
Leaving your dependents with an inheritance that helps them purchase a home, start a business or put some money away for a rainy day will keep you in their thoughts long after you’re gone. Also, you don’t want to burden your children with funeral expenses and medical bills when they’re grieving.
Myth #7: My job offers a life insurance policy for employees. If I leave my job, I can take it with me.
Unfortunately, this is false. Most employer-offered life insurance policies are not portable. Since there’s no way to know that you’ll remain at your current workplace forever, it’s best to purchase a separate life insurance policy.
Your Turn: Which of the above myths did you always believe to be true? Do you know of any others? Share your thoughts with us in the comments!