Many of us let popular claims about life insurance convince us that we don’t need it.
Whatever your unique needs, it doesn’t hurt to give what you’ve heard additional thought—in fact, it might help a great deal. Read on to see if you change your mind about seven of the most common life insurance misconceptions.
#1: I’m single and have no dependents
Everyone could benefit from having enough funds to cover their funeral costs and end-of-life medical expenses. The last thing you want is to leave your family or estate executor with a heap of debt and unpaid bills. You can also choose a favorite charity or cause to be the beneficiary of your life insurance payout.
#2: I’m a stay-at-home parent who doesn’t earn an income
Everyday tasks that you currently handle might need to be outsourced should you suddenly pass on. Your partner could find outside help with cleaning, cooking, and childcare with the payout of your homemaker’s policy.
#3: Why would I waste money on insurance when I can invest it to earn higher returns
Life insurance policies offer a guaranteed payout, whereas investments fluctuate with the market and so pose a greater risk for you and your dependents. The only exception is for the truly wealthy, those who have more than $1 million in liquid assets and have their funeral costs and medical bills covered.
#4: I can’t afford life insurance
A 20-year, $250,000, level-term policy for a healthy 30-year-old typically costs $150 a year. Not a bad tradeoff for knowing your loved ones will be taken care of after you’re gone.
#5: I’m too young to worry about life insurance
The argument for taking out a life insurance policy at a young age starts with the price of premiums, which are far less expensive for those under 35. In addition, most people at that stage of life don’t have sizable assets to pass on to their dependents. The 25–35 age group is generally too young to be completely financially independent and will likely need the insurance payouts to cover basic needs.
#6: My children are independent adults
Even if your children are no longer dependents, an inheritance could help them purchase or pay for a home, start a business, or set money aside for a rainy day. Plus, you don’t want to burden your children with funeral expenses and medical bills when they’re grieving. Funerals can be quite expensive, so having money for these costs can be a huge weight off for you and your loved ones.
#7: My job offers a life insurance policy for employees
Most employer-offered life insurance policies actually aren’t portable. If you leave your job, for whatever reason, your life insurance plan will most likely stay behind. And since there’s no way to know that you’ll remain at your current workplace for the long run, purchasing a separate life insurance policy can provide a nice safety net.
Whether these responses have made you rethink what you’ve heard about life insurance, we hope they’ve given you some ideas about planning for the future. If you still have unanswered questions—or this article has raised new ones—we’re here to help.