There are lots of myths floating around regarding life insurance. Some of them are out there only because they have been repeated so many times in the past that people believe them without doing any serious investigating. But others are myths because they may have been true at one time, but are no longer.
Here are seven myths regarding life insurance that you need to ignore.
1. You’re Good Because You Have a Policy at Work
Just because you have a life insurance policy at work doesn’t mean that it’s adequate. For starters, the loss of your job will also mean the loss of your life insurance coverage. And if you’re with your employer for many years, and have experienced a decline in health, you may find it very difficult to get replacement coverage.
There’s also an issue with the amount of coverage that you have. Let’s say that your employer has a policy for you with a $100,000 death benefit – is it enough? Probably not. Yes, you have life insurance, but it’s probably not nearly enough.
2. You Need X Times Your Income in Coverage
This is one of the most common life insurance myths in existence. Some sources will say that you need 8 to 10 times your annual income in life insurance. But not only will that make the cost of that much coverage prohibitive, but it may also be unnecessary.
You’ll probably do better by itemizing the specific needs you have for insurance. For example, you may want enough coverage to pay off your mortgage and any other debts that your family has. If you do, you will significantly lower your family’s need for monthly income. You may also add to that the cost of putting your children through college, and then adding an additional amount to cover your final expenses, as well as to provide them with a cash flow until your children reach the age of emancipation.
3. If You’ve Been Denied By One Company You Can’t Get Coverage
While it is true that a denial by one company will be made known to other insurance companies, that hardly means that you won’t be able to get coverage. Each company has its own underwriting standards, and what may be a decline in one company, could result in an approval at another.
Don’t go without life insurance simply because you have been declined by a single company. Work with a good life insurance agent to find companies that will say YES.
4. You Can’t Get Life Insurance Because You Have Health Condition X
This is another of the more common life insurance myths. People often assume that if you have had a major health event, such as a heart attack or a bout with cancer, that you will never be able to get life insurance.
The origin of this myth is that there was a time when it was absolutely true. However, as medical technology is improving, there is greater understanding of making lifestyle changes, people are living longer even after experiencing major health events. Life insurance companies have recognized this, and many offer products specifically for people who have had these health conditions in the past.
Once again, by working with an experienced life insurance agent, you will be matched with the best life insurance companies to meet your needs.
5. You Can’t Get Life Insurance Because You’re Past a Certain Age
This is another life insurance myth that does have a basis in fact. Up until about 25 years ago, it was very difficult to get life insurance past the age of 65. But if you watch TV, you are aware that there are life insurance companies offering policies to people as old as 80 or 85. So if you are over the age of 65, and want life insurance coverage, there’s almost certainly a policy available for you.
6. You Don’t Need Life Insurance If You Don’t Have an Income
It’s often thought the only real reason to have life insurance is to replace lost income for your survivors. However that is far from the truth. Even if you don’t earn an income outside the household, it’s almost certain that you provide domestic services that will have to be replaced after your death. This is especially true if you have young, dependent children. Proceeds from a life insurance policy can help your family to be able to afford to pay for critical services that you now provide.
And even if you don’t have children to take care of, there will still be final expenses, and probably uncovered medical expenses, that will need to be covered in the event of your death. In truth, everybody needs life insurance, no matter what their income situation is.
7. You Need Permanent Life Insurance Coverage
This myth points you squarely to whole life insurance, since it is commonly used as “permanent” life insurance. It has a fixed death benefit, and a fixed monthly premium, that will remain intact for the rest of your life. However, since the need for life insurance can rise and fall with the course of your life, a whole life insurance policy may prove to be too much coverage at one stage of your life, and not enough at another.
Term life insurance is much better for most households, since it has the built-in flexibility to be added and subtracted as your circumstances warrant. It is also far less expensive than whole life insurance, which is why it needs to be favored to cover your life insurance needs.
Give us a call, and we will help you to work around these myths, and find the right life insurance policy for you and your family.
