Thursday, April 24, 2014
4 Myths About Life Insurance
Misunderstanding life insurance often prevents young families – who need this protection the most – from purchasing the life insurance they need.
Myth 1: I only need life insurance if I’m the primary breadwinner in my family.
Whether or not you work, your family will miss your contribution to the household if it disappears. If you do work, even a modest income may help pay for important items and family activities.
And though stay-at-home parents may not provide a cash income, they often provide valuable services. These services include childcare, cooking, housecleaning, and household management – the cost to replace these services is often severely underestimated.
Myth 2: If I buy a term policy and find that I still need protection when the term ends, I can always renew the policy.
Term insurance provides protection for a specified period of time. It can be ideal for people who feel they have temporary needs, such as a mortgage.
However, many families realize that even after the kids are gone, their need for insurance continues – to provide income for a surviving spouse, eliminate debts, pay taxes, etc.
Because premium rates increase with age, renewing your policy when the term expires can be prohibitively expensive. Plus, poor health could make renewal impossible.
Myth 3: I only need life insurance when my kids are young and my financial responsibility is the greatest.
There is no question that you need insurance when your children are young. But for people with insurance needs later in life, permanent insurance is often a good choice.
Permanent policies provide the opportunity for lifelong protection. They also accumulate cash value that can be borrowed against or withdrawn (although doing so may affect the death benefit and have tax consequences).
Permanent insurance premiums are generally higher than term premiums when first purchased. However, they typically do not increase over time and can stop completely later in life – even as your coverage continues – depending on your policy.
Myth 4: There are no benefits to life insurance while I’m living.
The first reason for any life insurance purchase is to provide protection for your family. But permanent insurance policies – such as whole life, universal life, or variable life – offer other features that many people find attractive.
Specifically, permanent policies provide a cash accumulation value that grows over time and can be borrowed against. The cash value can be helpful in planning for college, retirement, and emergencies.*
The best way to find the right solutions for your needs is to talk to an expert.
That’s where I can help. I’ll review all your options with you to help you create a tangible plan for the future of you and your family.
Call me today to set up an Insurance and Financial Review.