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Half a Dozen Life Insurance Myths, Debunked!

Half a Dozen Life Insurance Myths, Debunked!

| September 22, 2021
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Did you know that September is Life Insurance Awareness Month (LIAM)?

Every year in September, the financial industry comes together to help educate people about the importance of life insurance.

While owning life insurance is integral to one’s sound financial health, people often find it complicated and even a little intimidating. Because of its complicated nature, it’s not surprising that people get some of the details wrong. Here are some of the most common misconceptions that people have about life insurance — and what’s really true…

 

  • Myth #1: Life Insurance isn’t a necessary part of a financial plan.

Truth: Contrary to popular belief, life insurance is a crucially important part of a sound financial plan, even if you have other investments in your portfolio.

Think about it: If you died, would there be enough money to pay for your final expenses, outstanding debt, not to mention the recurring costs of maintaining your household? These expenses can add up to a long-term financial burden on your family. Could your husband or wife adjust to their new life without you, or at the very least without the replacement income a life insurance policy would provide?

 

  • Myth #2: It’s better to put your money in investments than life insurance.

Truth: You’d be taking a big chance if you were to depend solely on your investments in the early years of your life, especially if you have children or other people who depend on you.

Think about it: If you die without coverage, there may be no other means of income after your current assets run out.

 

  • Myth #3: A single person with no dependents doesn’t need life insurance.

Truth: Life insurance not only protects, but it also helps. A life insurance policy can protect your loved ones by preventing them from assuming any co-signed debt unto themselves. If there’s a non-profit or a charity that you’re passionate about, you can assign some of your death benefit to it. You can also assign your death benefit to a parent, sibling, niece, nephew, or anyone else that you care about.

Think about it: Do you hold a lot of debt like an outstanding mortgage, business loans, personal loans, student loans, car loans, etc.? More importantly, do you have a co-signer on any outstanding debt? If so, any co-signer on outstanding debt(s) would be held responsible for repaying your loans once you’re gone. 

 

  • Myth #4:Young, healthy people don’t need life insurance.

Truth: While younger people don’t need life insurance, that doesn’t mean it’s not still a good idea to have it. Especially when you consider the fact that premium costs increase by anywhere from 5% to 9% each year as you age. You should also consider your future insurability based on your health. If you qualify now while you’re in good health, your policy can follow you throughout your life, even if you develop health issues later.

Think about it: You may be young and healthy now, but life happens, and things inevitably change. If you develop a health condition before buying life insurance, you may end up paying a higher premium.

 

  • Myth #5: Life insurance is just too expensive.

Truth: No, it isn’t! Or at least, it doesn’t have to be. If you want to make your beneficiaries millionaires, then you’ll need to pay more for life insurance. Generally speaking, life insurance is one of the most affordable types of insurance. An insurance policy that is expected to pay out frequently, like car insurance, is significantly more expensive than insurance that will only be paid once in a lifetime.

Think about it: You can get a decent sized, $500,000 policy for as little as $16 a month. You could spend more than that by buying coffee every day.

 

  • Myth #6: Life insurance can only protect your family.

Truth: If you’re a business owner, you can use life insurance to help protect your business. To help protect your company from the loss of your most valuable assets, your employees, you can get what is most commonly known as “business life insurance.” You can also purchase life insurance to fund what’s called a “buy/sell agreement”, which is basically a formalized business continuation plan.

Think about it: Should your business experience the loss of key personnel, this type of insurance will cover the costs to train and fill the role without missing a beat.

 

Six months. According to the 2021 Insurance Barometer study, that’s how long it would be before 42% of Americans would face financial hardship if they lost a primary wage earner. One in four Americans would struggle financially within one month. The solution? Life insurance!

Life insurance is a sure-fire way to help secure your dependents’ financial future and provide the income they’ll need to cover any immediate or future costs that may arise after you die. Life insurance is intended to provide ongoing support and could mean the difference between a loved one being able to pay the mortgage or getting forced out on the street.

 

If you’re thinking about getting a life insurance policy but are still unsure about which option is best suited for your needs, we’d love to hear from you.

CONTACT US today to schedule a review with one of our experienced advisors about your situation.

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