If you are among the working adults who intend to buy life insurance this year, be careful not to fall for the common myths and misinformation about the subject. Unfortunately, the vast majority of people don’t even know the basics about insurance, which leaves them susceptible to buying too much or too little insurance, paying premiums that are too high, or buying from a company that has less than a stellar reputation. Don’t let a lack of information about what you need to know get between you and the ideal policy.
Take time to learn how the term differs from whole life, for example. Additionally, learn about the concept of insurable interest, and how it affects you. Before you set out to acquire a policy for yourself, keep in mind that even if you are single and have no children, it’s still smart to have coverage, and there’s no need to spend a lot, either. Here are the particulars about common insurance myths, along with the true explanation for each one.
Myth: A Term Policy is All You Need
Term policies last for a stated number of years, while whole coverage does not end unless you cancel it, sell it, or stop paying the premiums. Each one serves specific purposes, and there’s no one kind fits all advice about which is right for you. The truth is that many working adults need their whole life rather than term. The myth about term being best probably started because it costs less.
Myth: You Can Insure Anything
Everyone has heard of celebrities, musicians, and sports stars who insure their legs, faces, fingers, etc. It happens. But you can’t actually insure something unless you have what is called an insurable interest in it. So, a famous pianist could insure their hands because they wouldn’t be able to work if their hands were injured or permanently disabled. For most people, the only things that can be insured are a home, long-term health, vehicles, life, and other valuable property. It helps to review a short but informative guide about the meaning of the term insurable interest to understand how coverage works and how insurers operate.
Myth: You Only Need Coverage if You Have Children or a Spouse
The fact is that many single adults want to leave a legacy behind to their alma mater, a charitable foundation, or some other institution. Besides, if you’re taking care of elderly parents and predecease them, life insurance can fill in the financial gap. This myth has been around for a long time. It ignores the fact that people sometimes sell their policies or borrow against them in a financially difficult time.
Myth: Workplace Polices Are All You Need
The majority of employers who offer life insurance coverage to workers fall short of meeting the minimum dollar amounts for adequate protection. But perhaps the main defect of company-sponsored policies is that you can lose them if you change jobs, quit, or get fired.
Myth: Good Coverage is Expensive
When you buy from reputable carriers, choose to get the right amount of coverage, and budget for it the way you would any other necessary expense, excellent life insurance is competitively priced and offers solid value for the amount you spend.