Ignore These Life Insurance Myths
Many young single people believe they don’t need life insurance. Unfortunately, this misconception is hard to come to terms with before it’s too late. After all, life insurance is one of those investments that you can’t buy after you need it, and if you wait too long, it will cost a lot more.
The purpose of life insurance is to provide insurance so that your family or loved ones don’t have to pay bills or meet other financial obligations after you’re gone, but that doesn’t mean you don’t need to think about it. until you have a family. Here’s what you need to know about this and other life insurance myths that are best ignored, and what facts to consider instead.
Life insurance only matters after death
In fact, life insurance is for the living. It’s in the name, and of course the main reason to get life insurance is to financially protect your loved ones in the event of your death. But many life insurance policies also have living allowances that allow you to use your plan if you are diagnosed with a terminal or chronic illness. Another way you can benefit from your life insurance plan while you are still alive is through its cash value. Depending on the type of plan you have, you can accumulate a tax-deferred fortune through your policy, with the ability to withdraw funds, or take out lifetime worth of loans.
All life insurance is too expensive
The cost of life insurance will vary depending on your age, gender, medical condition and the specific policy. As expected, the younger and healthier you are, the cheaper life insurance will be. For example, according to Policy Genius , a healthy 35-year-old man can pay less than $28 a month for a term life insurance policy with a $500,000 death benefit and a 20-year term.
If you’re worried about expenses, Business Insider advises you to start small. Get as much life insurance as you can afford right now and then reevaluate when you can increase your coverage in the future. For your first plan, term life insurance is one of the most popular and affordable options. This is a simple policy that provides a large guaranteed amount for a low premium over a long term, usually 10 to 30 years.
If you have health concerns, consider looking into policies that do not require a medical examination.
You don’t need life insurance if you’re single with no dependents
Perhaps this is the most common myth about life insurance: if no one depends on you, why create a financial security blanket? The reality is that if you have a transferable debt, such as a student loan , you can hold your parents or other family members liable after you die. Life insurance is not just for married couples.
And while many think of life insurance as a replacement for lost income, even the unpaid stay-at-home parent should take out life insurance. While they may not be the traditional breadwinners, the cost of replacing childcare or other household chores is worth considering and preparing for.
You should just stick to your employer’s life insurance
While many company life insurance policies are inexpensive (or even free) perks, they are probably not enough to meet your financial needs, usually offering about a year of your regular salary. Investopedia explains : “If you have dependents who rely on your income, then you probably need insurance coverage for at least six times your annual salary… Some experts even recommend insurance coverage for 10 to 12 times yours.” wages.” It is wise to supplement employer-provided insurance benefits with policies tailored to your needs.
Conclusion: life insurance is not for everyone
Take advantage of the fact that life insurance is highly customizable. And compared to other forms of insurance, your life insurance needs will change dramatically over time. Think about it: kids, marriage, divorce, remarriage, caring for the elderly, and retirement… and that’s just your thirty. (Joking.)
Even if you don’t think you need it now, you should start with what you can afford and expand coverage as your circumstances change. Nerd Wallet provides a handy table to help you compare quotes right now, and companies like Policy Genius make it easy to find a good price . But instead of relying solely on online platforms, it’s also worth consulting with a real professional.