No one likes to think about buying life insurance. After all, buying life insurance means admitting you are not immortal, and that your loved ones need protection.
To make matters worse, many consumers harbor harmful misconceptions about life insurance. Here are 7 commonly held but incorrect beliefs about this important form of insurance coverage.
#1. All Life Insurance is the Same
All life insurance is not the same, and it is important to shop around for not only the lowest price but the best coverage as well. The strength of the insurance company matters a great deal – after all, you want the coverage to be there when you need it.
That is why it is so important to work with an agent when shopping for life insurance. Your agent will help you select the best policy for your needs so you can get the most coverage for your money.
#2. Employer-Provided Life Insurance is Enough
Many employers provide a basic level of life insurance, typically between 1 and 2 times your annual salary. If you have this coverage you might think that it is enough, but chances are it is insufficient.
Experts recommend workers have life insurance equal to at least 5 to 10 times their annual salaries. If all you have is employer-provided coverage chances are you are dangerously underinsured.
#3. Life Insurance is Too Expensive
Some people put off buying life insurance because they think it is too expensive, but that is no reason to put it off. Prices vary widely from company to company, and a good agent can find you a quality policy at an affordable price.
If you have been putting off buying life insurance because of the cost, do yourself a favor and call a local agent. You may be surprised at just how affordable this essential coverage can be.
#4. I Can’t Qualify for Life Insurance
If you have health problems, you may think that you will not qualify for life insurance, but that is probably not the case. You may have to pay higher premiums than if you were in perfect health, but there is probably a policy for you. Ask your agent about finding the right policy and discuss your health history and past challenges when discussing your coverage options.
#5. Only the Breadwinner Needs Life Insurance
Some couples think that only the main breadwinner needs to have life insurance, but that is not necessarily the case. If you are employed and your non-working spouse dies, you may need money to hire a nanny or childcare agency. If your spouse has some coverage in place, you could use that death benefit to pay the costs and avoid a financial calamity.
#6. Life Insurance is an Investment
Some life insurance, including the popular whole life option, does have an element of investment built into it. Even so, life insurance is primarily designed to protect the people you care about in the event of your untimely death.
No matter what kind of life insurance you buy, its number one goal is to provide financial protection to your loved ones. All life insurance should be evaluated based on those criteria.
#7. Everyone Needs to Buy Life Insurance
Life insurance is important, but there are some people who simply do not need it. If you are single with no dependents and no one relies on you financially, you probably do not need life insurance. If you are retired and the kids are on their own, you may no longer need life insurance coverage.
It is important to complete an insurance checkup once a year to make sure the coverage you have still makes sense. That annual checkup will make it easier to assess your current needs and ensure you are neither overinsured or underinsured.