People who choose life insurance policies based on myths about insurance could end up making a costly decision. It is important to understand which kind of life insurance is right for you or whether you need insurance at all. Life insurance policies use legal language and have different names in different companies, which can scare you from learning about them. So, here are five common life insurance myths to help you from making the wrong choice.
Myth: I Am Alive, Therefore I Need Life Insurance
Life insurance protects dependents and guarantees a steady source of income after their breadwinner's death. Single people without dependents or childless couples who earn enough to lead a good life need not consider buying insurance. Purchase life insurance for a child only if you depend on her income. As for retired people, unless you are insecure that your partner would desert you or if you depend on a pension that would disappear upon your partner's death then you should get life insurance
Myth: I Don't Work So I Don't Need Insurance
Even those without jobs need life insurance. A jobless parent with dependent children need not buy life insurance, as there's no paycheck to replace. However childcare could cost $10,000 to $30,000 annually. So estimate the amount it would cost for your family and use that number for your "salary" when calculating life insurance needs.
Myth: Odds Are I Won't Need It, So Why Spend The Money?
Why skip life insurance to save money? The reason why life insurance is cheaper for younger people to buy is because chances of death low for youths. But life is unsure and the time of our death is not predetermined therefore do buy life insurance to provide for your family incase the worst does happen. If right kind of insurance is bought you could provide enough financial security to your dependents.
Myth: If It's More Expensive, It Must Be Worth It
Term insurance, is cheaper, better choice for most of us since term life insurance is "pure" insurance with no investment add-on and guarantees your coverage till the time you pay your premium. Term insurance is specifically for those who want life insurance for a stipulated duration of time. Level term insurance is probably the best option since premiums don't increase while you have it. There are various types of Permanent insurance such as whole life, universal and variable, and more but is seven to eight times more expensive than term. A permanent insurance policy combines life insurance with an investment that builds up cash value which you can exploit by borrowing or surrendering (cashing in) the policy.
Myth: It's Such A Hassle To Get Insurance
If you need to change your life insurance, never cancel existing policies until your new insurance is in place. You should not keep any gaps in your insurance coverage.
Most reputed companies provide online facility to download quotes and application forms on the Internet. You can easily shop for the best possible rates online and then consult a trusted agent to purchase the insurance. After contacting an agent or company they themselves will arrange to collect the medical information they require.
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