There are a lot of myths about life insurance that you’ve probably heard a
time or two in your life. If you have life insurance or if you are thinking about
getting some life insurance, it’s important to know some basic facts. So here are 9 Myths about life insurance that you need to know.
1. “Life insurance is expensive”
If you are 80 years old and looking to get a million dollars in coverage, then yes, life insurance, in that case, is expensive. For everyone else, it can be very affordable, especially if you are really healthy. There are a lot of options to choose from so life
insurance can fit anybody’s budget.
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2. “I don’t need life insurance, I’m 30 years old and in the best shape of my life”
If you are single and don’t have any dependents or anyone that
relies on you financially, then you probably don’t need life insurance. Anyone that has someone that relies on them financially, needs life insurance. Even if
you are healthy, you just never know what could happen. Plus, getting life
insurance when you are healthy is the best time to get it.
3. “You can’t get life insurance if you have any health issues”
There are a lot of life insurance companies available these days. The more companies there are, the more competition there is. Life insurance companies are competing for your business and are lowering their eligibility requirements
tremendously. There are even companies that will give you life insurance
without asking any health questions at all.
4. “I have life insurance through my work, I’m good.”
Not only is life insurance through work more expensive in a lot of cases, but it also not portable. That means you can’t take it with you when you leave your work. So if you get sick and have to quit, you will lose your life insurance and have a heck of a time trying to get a new policy.
5. “An Accidental Life Insurance policy will pay no matter what.”
Time and time again I’ve seen accidental life insurance policies be portrayed as a policy that you can count on. This is simply not true. You cannot count on an accidental life insurance policy to pay a death benefit unless of
course, it is an accident. You’d be surprised, but a lot of people think that if you die by cancer or some other sickness, that it’s an accident.
Accidental life insurance policies will only pay out if you die in an
accident. For example, a car accident, plane crash, fire Etc. Even then, a
lot of accidental life insurance policies have a lot of clauses in them, so
you really have to be careful. If you think the life insurance policy that
your bank gives you for free for having an account with them will cover
you, think again!
6.“I’ll just set some money aside in case I die”.
Let’s say you make $75,000 a year and have a spouse and 3 kids. Then, the unforeseeable happens and you die. To replace your income, you would need about $750,000 to $1,000,000. So unless you have some serious money stashed away, get some life insurance. It’s super cheap!
7. “All life insurance companies are the same”
Although a lot of life insurance contracts are the same, for example, a 20-year term policy contract is going to be almost identical between companies, but the
companies themselves can be very different. Life insurance companies are
rated by financial rating companies like am best, fitch, Moody’s, etc.
You want a company that has been around a long time and has a good financial
rating. Some life insurance companies offer free member benefits like
family events, legal services, and other free goodies.
8. “All life insurance policies build savings”
Term life insurance does not build any savings known as “cash value”. It simply covers you for a term of time for an amount of money. Whole life and Universal life do build cash value and the amount of cash value you accumulate will depend a lot on the amount of premium you are paying and the interest rate your policy pays.
9. “If my life insurance company goes bankrupt, I’m screwed!”
Not necessarily, each state has what’s called a State Guaranty fund. This
program is built to protect policyholders from insurance companies going
bankrupt or insolvent. So if by chance your life insurance company does by
chance tank, you will still be protected. To avoid this fear, pick a company with a good financial rating and you should have no problem whatsoever.
There are a ton of myths about life insurance. Once you get your facts
straight, you will realize what a good buy life insurance really can be.
Let us guide you through the process of finding the best policy for the best possible price. Hopefully these 9 myths about life insurance that you need to know will help you in your decision.