Common Life Insurance Myths Author:    Posted under: Life InsuranceLife Insurance questions answered

The subject of life insurance is anything but simple. Aside from the fact that there are literally dozens of life insurance companies out there, there are also different types of life insurance policies to compare – and life insurance companies use different names for their policies making it difficult to comparison shop.

What’s more, if you ask friends and family for their opinion, you’re bound to get misconceptions mixed in with the truth. Here are just a few of them, just to help you separate fact from fiction.

  1. I’m young, healthy and therefore I absolutely have no need for life insurance. – Sure this is true, if you’re single, do not have plans to have children in the future, your parents are not financially dependent on you, have no outstanding debts and are earning enough to cover any and all medical bills and funeral expenses for yourself down the road. Otherwise, it will be wise of you to obtain life insurance coverage to ensure that your loved ones are provided for, and their futures financially secure even after you are gone.
  2. I don’t work, so I don’t need life insurance. – Consider the work that you do inside the home: the cost of childcare and housekeeping services is not inexpensive. In the absence of a stay-at-home parent, your family will not only be emotionally crippled, they may also take a tumble from the weight of the financial burden the surviving partner will now have to shoulder month after month.
  3. It is ALWAYS better to buy term and invest the difference. – While the belief that buying term and investing the difference holds true for some people, it is not always the case for everyone. Those who know for sure that coverage at death is a necessity should consider permanent coverage as the total premium you pay for a pricey permanent life insurance policy may still be less than the continuing premiums with less expensive term policies in the long run.
  4. The children are all grown up and the mortgage paid off. I don’t need insurance anymore. – The need for life insurance varies from one family to another. However, take other factors into account. Does your spouse still depend on you financially? Do you have funds in place for funeral expenses? Are all your debts paid off?
  5. I only need enough life insurance coverage to cover for my family’s future expenses. – If you want to ensure your family’s well-being after you’re gone, you’ll probably need more than that. In addition to end of life medical bills and funeral expenses, other factors should be considered when computing how much life insurance you need to carry such as payment for debts (i.e., mortgage), college education for your kids and provision for your family for several years.
  6. Should I become chronically-ill, my term life policy can be converted to whole life so I don’t have to worry about losing coverage. – What many aren’t aware of is the fact that many convertible policies can only be converted within a five or ten year window, and most of the time, your insurance company will not give you warning as to when that window is about to close.
  7. Smokers can’t get cheap life insurance, if they can get it at all. – While it is true that smokers pose a higher risk for insurance companies because their life expectancy rate is considerably lower than those of non-smokers, they are still able to obtain it. And even if you do have to pay higher premiums for coverage, most life insurance companies classify people who have stopped smoking for more than a year as non-smokers and the premiums are lowered as a result.
  8. My employer provides life insurance coverage so that should be adequate. – Most of the time, employer-sponsored life insurance provides the bare minimum amount of coverage and it will most certainly be less than what your family will need. Obtaining a separate life insurance policy will still get you a more adequate coverage.
  9. I don’t need any more life insurance because my mortgage lender provides it. – Wrong. If you’re getting life insurance through your mortgage loan that is only to ensure that your mortgage will be paid in full in the event of your death. Your family will not get any financial benefit from it apart from that.

I will not be able to get life insurance coverage because I’m in poor health. – The existence of a serious illness such as heart disease, cancer, diabetes and the like is not indicative of your eligibility for life insurance. In fact, there are a lot of companies that specialize in this type of coverage. One company may decline your application, but that doesn’t mean that the next one will too. Additionally, one insurance company may charge you higher premiums while another might be willing to give you coverage for the standard rate. Shopping around will help you determine which insurance company will give you coverage in your current condition, and which one will give you more value for your money.


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