Having sufficient life insurance is essential. And yet, so many of us buy into popular misconceptions, convincing ourselves we don’t need to bother purchasing a policy.
But don’t be fooled. Read on to see how seven of the most widespread life insurance myths are easily debunked.
Myth #1: I’m single, and I have no dependents so I don’t need it.
There is a good reason for you to have life insurance as a single person. First, every person should have enough funds to cover their funeral costs and end-of-life medical bills. You don’t want to leave your family or executor with a legacy of debt and unpaid bills. Second, purchasing a policy is the best way to be remembered for your generosity. You can choose your favorite cause to be the beneficiary of your death payout, helping improve the lives of others after you’re gone.
Myth #2: I’m a stay-at-home parent who doesn’t earn an income. My partner needs life insurance; I don’t.
Unless you sit at home twiddling your thumbs all day, the tasks that fill your time will need to be outsourced to hired help if you suddenly pass on. Your better half may need to pay for cleaning help, a cook or a nanny – or maybe all three! All that costs money and that money can come from the insurance payout from a homemaker’s policy.
Myth #3: Why would I waste money on insurance when I can invest it to earn higher returns?
Are you sitting on millions? Unless you can honestly answer that with a “yes,” you’re better off putting your money somewhere safe with a guaranteed payout – like a life insurance policy. Investments are never 100% secure, and you don’t want to leave your dependents with an iffy source of funds. The only exception to this rule is for the truly wealthy who have more than $1 million in liquid assets and have their funeral costs and medical bills covered.
Myth #4: I can’t afford it.
A recent Life Happens study revealed that 80% of uninsured people who claimed life insurance is too expensive, had overestimated its cost. A 20-year level term policy for a healthy 30-year-old usually falls in the ballpark of less than $15 a month.
Myth #5: I’m too young to worry about life insurance.
There’s no better time to purchase a policy than when you’re young. The premiums are far less expensive for those under age 35, and most people in that stage of life do not have sizable assets to pass on to their dependents. Most importantly, dependents of the 25-35 age group will be too young to be financially independent and will need death payouts for basic survival.
Myth #6: My children are independent adults. Why would I need life insurance?
There’s an old bit of advice claiming that parents of adult children should keep their mouths shut and their purse strings open. It always feels good to provide for your children, regardless of their stage of life. Leaving your dependents an inheritance will help keep you in their thoughts after you’re gone.
Also, you don’t want to burden your children with funeral expenses and medical bills when they’re grieving. Just the cost of a funeral and burial can top $8,000! It’s always best to have these expenses covered before it’s too late.
Myth #7: My job offers a life insurance policy for employees. If I leave my job, I can take it with me.
Unfortunately, this is false. Most employer-offered life insurance policies are not portable. If you leave your job, for whatever reason, you’ll also be leaving your life insurance plan. No one can predict the future, and there’s no way to know you’ll remain at your current workplace forever. That’s why it’s best to purchase a separate life insurance policy, even when your employer provides you with one. Plus, buying your policy will allow you to choose one that best suits your needs.
It’s never fun to think about what will happen after we’re gone. Taking the time to plan for end-of-life expenses, though, and leaving loved ones with enough to live on when we’ve passed, is the responsible thing to do.