When faced with the many different kinds of policies available and all the legal jargon involved, it’s no wonder that life insurance often gets a bad reputation in the area of financial planning. Different companies use different terms for their contracts and different agents can give you different answers to a single question. So, what do you do? How do you find out what is right and what is wrong in terms of choosing the best policy and whether you are even eligible for one in the first place? We have noticed that there are a few questions that keep cropping up in relation to life insurance and that there are subsequently a few myths that need to be cleared up before you can go ahead and make the correct choice.
Myth No. 1: You don’t need any life insurance.
False. There are a lot of people who prefer to take their chances and not opt for any type of life insurance. No doubt, it’s less likely that you will die young or during your working years, but then again that’s why premiums are so much cheaper if you buy them when you are young and healthy. However, the main reason you buy an insurance policy is to protect yourself and your family against unforeseen disaster. The right kind of insurance can offer you much needed financial security without leaving you penniless. If you have any dependents that rely on you and your income or even if you have racked up debts such as mortgages, credit cards bills, or auto loans, then life insurance is a necessity.
Myth No. 2: I don't need insurance if I don’t work.
False. Many stay-at-home parents think life insurance is not needed as there is no salary to replace. If you calculate the cost of childcare, housekeeping, cooking, and transportation, you may get a clearer picture of how much a non-working spouse contributes to an average household budget. You do the numbers for yourself and figure out how much these services would cost your family if they were outsourced. You can then use this amount to calculate the applicable life insurance coverage needed. It is imperative for everyone at home to have a life insurance policy and avoid any unnecessary hardships in the future.
Myth No. 3: The life insurance I get at work is more than enough.
False. If you are single and lead a modest life in terms of expenses, then your employer-paid term policy may be adequate. But, in case you are married with children or any other dependents, and are aware of your debts and funeral expenses, you may need more coverage than what is offered by your employer. You will need to crunch some numbers and review whether your employer-paid insurance is enough to look after your family in times of a crisis or after you pass away. Needless to say, if you leave the job or even after retirement, employer-paid insurance will not be applicable.
Myth No. 4: You can’t get insurance if you have poor health or if you smoke.
False. Just because you suffer from diabetes or heart disease, for example, doesn’t mean that you will not be able to qualify for any insurance. Many companies in fact specialize in these types of policies. This coverage will be more expensive, but it is still available. There might also be some companies that only demand an additional surcharge, while others might even charge a standard rate. The important thing is to shop around. Let’s face it; if you are living with a serious illness, a life insurance policy becomes that much more important for your family and dependants.
If you are a smoker, all is not lost as well. Your premium will be slightly higher than the premium paid by a non-smoker but you are still eligible for insurance. Some companies even have preferred rates for smokers, so always check beforehand. If you have managed to be smoke free for one whole year, a lot of life insurance companies will apply normal rates and consider you a non-smoker. Another reason to quit.
Myth No. 5: It's too much of a hassle to get insurance.
False. This may have been the case years ago but thanks to the Internet, the process has been made easily accessible and simplified. You are now just a click away from online quotes from dozens of preferred and highly rated insurance companies. You can then do all your research and purchase your insurance by downloading the application forms and scheduling the free medical exam necessary for any policy.
These are just five of the prevalent myths surrounding life insurance today. These facts will only prove that you should not leave life insurance out of your planning. There can be no more excuses against preparing for your future and protecting yourself and your family.
by Denise
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