Life insurance is one of the most misunderstood type of insurance policies. Misconceptions and partial truths circulate in the public imagination. Here are the top five myths about life insurance, and the real information:
It is Expensive
Many people are surprised by how affordable term life insurance can be. Price policies vary from person to person, which is why people are encouraged to shop around when they apply. Different companies may offer different costs for a plan. But the average yearly cost of a $500,000 policy (20-year term) for a 30-year-old female is $252 a year. That calculates out to less than $25 a month.
Only the Elderly and Parents Need Life Insurance
Another common misconception: the beneficiary of a life insurance policy does not have to be a child. Parents are not the only people who need life insurance. Partners can be beneficiaries, as well as anyone else who depends on the policyholder. And the sooner one applies for a policy, the cheaper the policy is likely to be. The one factor that determines how much the policyholder pays is their health; health is likely to decrease as a person ages.
It’s Difficult to Apply for Term Life Insurance
Like many other things, the internet has changed how people apply for term life insurance. In the past, people may have needed to see a doctor in person to qualify for term life insurance policies. With the rise in telehealth accessibility, the vast majority of companies have ways of applying for policies over the phone or online.
My Employer Offers Me Enough
For those people who have access to a life insurance policy through their work, the coverage is still likely to not be enough for their family. The median workplace life insurance policy is approximately one year’s salary. It is best to consider workplace life insurance a supplement to a life insurance policy rather than the entirety of the coverage. Online tools exist to calculate how much coverage your family may need, but one guideline is to aim for five to ten times the policyholder’s annual salary.
I Only Need Life Insurance If I’m Working
Even if a policyholder isn’t employed outside the home, the value of the labor they provide in the home is enough reason to consider a life insurance policy. Despite life insurance typically being thought of as a replacement for lost income, it can be vital to pay for childcare or housework, especially if the policyholder is the one performing those tasks now. Plan coverage with all of the family’s contributions in mind, not just working benefits.
