There are many misconceptions about life insurance, what it covers, and who needs it.
For some, misunderstandings about the costs and benefits of life insurance may lead to passing on coverage, even though it might make very good financial sense.
1. Life insurance is expensive
When it comes to insurance premiums, life insurance is uniquely affordable. Especially for a young person in good health, a policy might not even approach $200 a year.
2. The young don’t need it
It makes sense to purchase a life insurance policy while you’re young and healthy. It will be cheaper, and for some types of policies, will allow you to lock in your rate. This can save you a ton of money in the long run; waiting to buy a policy when you’re older, or sick, can really cause the premiums to jump.
3. Life insurance through work is adequate
Group rates through work tend to be lower. However, these plans typically have lower levels of coverage, probably just up to double your salary or so. Even if you have a plan through work, supplemental life insurance coverage may be something to look into to ensure you and your family are fully covered.
4. Life insurance is only needed when you have children
The majority of workers who are married have life insurance. While all couples with children should definitely have life insurance, even married couples without kids should too in many situations.
If you pass away you want to make sure your partner can afford expenses related to funeral costs, and any outstanding debt like a mortgage or car payment. This is especially true if you are the main breadwinner. In addition, outstanding debts with cosigners, like student loans, can be passed on to others after death.
5. Benefits are taxed
A common misconception about life insurance is that the benefits are taxed upon death. In nearly all circumstances, benefits paid upon death are not subject to taxes. Don’t let this this idea make you pass up on coverage that is beneficial to your family.
To get advice on finding a plan that’s right for you, talk with the experts at John B. Wright Insurance.
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