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Set Yourself Straight on these 5 Life Insurance Myths

Life insurance is a contract between you and your insurance company. The contract legally obligates the insurance company to pay a specified amount to a named beneficiary when the individual taking the insurance dies.

Local Insurance Policy is an important safety net for families, but many opt out of a policy because they have heard too many exaggerations about life insurance. Let’s look at those misconceptions to set you straight when it comes to life insurance. These points should help you make smarter life insurance decisions to protect your family and your peace of mind.

Life Insurance Is Expensive

Many believe that life insurance is only for rich people because only they can afford the premiums. That’s just not true. While the type of life insurance often bought by wealthy individuals is costly, almost anyone can afford term life insurance. The truth is that poor families need life insurance the most since dependents often have few options in making up for the lost income of a family member.

One Insurance Policy Is Enough

Most people think that because they have insurance at their workplaces, they shouldn’t bother getting another one. Sometimes this is true, but usually, an employment provided policy just isn’t enough. Calculate your life insurance needs based on your dependents’ needs and your collateral debts. Then secure quotes from several insurance companies to be sure to get the best rate.

Life Insurance Is Only for Families

While life insurance is mostly used by families, it is also advisable for single people. Should you diet unexpectedly, someone will have to pay the bill. Make that process as easy on your clan as possible. It’s also important to be sure that any student loans are paid for parents who may have cosigned. Private student loans are not forgiven if you pass away.

All Insurers Are the Same

When deciding to take life insurance, research the companies with the best financial profiles. Premiums are wasted if paid to a company that becomes insolvent and cannot pay policy benefits when the time comes. Also take time to research customer service ratings in case anything ever goes wrong with your policy.

Not only is there. Strong difference between companies, but there is also a big difference between types of policies. Even term life insurance, the simplest form of life insurance, can be no load, fixed premium, variable premium and convertible. Policies also come in a variety of terms, from five years up to 30 years.

Retirees Don’t Need Life Insurance

Most retirees say they do not need life insurance because they have sufficient savings and investments to leave to their heirs. While this is an accurate observation, sometimes life insurance is a good choice even for those with no dependents. Whole life insurance can be a good way to protect loved ones from estate taxes and other costs that can diminish the estate.