Most of us would do anything to protect our loved ones. This includes purchasing life insurance. Many people approach this decision with hesitation, confusion and even denial. We understand. It’s not easy to think about what would happen in the event of your death, even though it’s extremely important. Common myths and misconceptions about life insurance probably don’t help either when it comes to soothing your worries.
To help you get started and ease your worries, here is the truth about common life insurance myths:
I’m single, or married with no children, so I don’t need to buy life insurance
Even if you are in this demographic, life insurance is still important. It may help your loved ones pay off your debts if you pass away. Planning ahead not only helps protect your loved ones from unexpected financial burdens, but it also initiates your financial plan for the future.
I can’t afford life insurance
A study found that 80 percent of consumers misjudge the cost of term life insurance. Life insurance can be extremely affordable for many people; it just depends on the coverage you’re looking for. Start with a policy that fits your budget and you may be able to purchase additional coverage later on.
I’m a stay-at-home parent who doesn’t earn income. I don’t need life insurance
Life insurance is still essential if you’re a stay-at-home parent. While you don’t bring in an actual paycheck, you provide services that could cost tens of thousands of dollars to replace every year. These may include childcare, daily transportation, home maintenance and cooking. If you pass away, life insurance could help cover some, if not all, of these costs.
I have a life insurance policy through my job. If I take another or get laid off, I can take the policy with me?
Employer-offered life insurance policies are usually not portable. If you leave your job, you probably also leave your life insurance behind. When you buy your own, separate life insurance policy you decide how long you want to be covered. With an individual policy, you may also be able to get more personalized coverage that fits your financial needs.
My beneficiaries have to pay income taxes on the proceeds from my policy
Life insurance death benefits are usually income-tax-free and don’t need to be reported. Your life insurance helps provide your family with income-tax-free money to help pay for funeral expenses, a mortgage or college tuition.
I can’t convert term life insurance to permanent or whole life insurance
Term life insurance can be converted into permanent life insurance, depending on the policy purchased. However, it’s a good idea to speak to your agent right away, as these types of term policies usually need to be converted within a specific time period.
I don’t need life insurance once my children are grown up
Life insurance is useful throughout many stages of life. Life insurance later in life has various benefits, like relieving the burden of paying for final costs, paying for state estate taxes, paying off debt left behind, or simply leaving children with inheritance.
I have a comfortable savings account, so life insurance is unnecessary
Savings may last you through retirement, but what about final expenses? The national median cost of a funeral and burial in 2014 was $7,181. If you don’t have enough money saved, your loved ones might not be able to pay off final expenses see this site. If your mortgage hasn’t been paid off and you haven’t saved enough, your loved ones might not be able to hold onto your home.