Many of us let popular misconceptions about life insurance convince us that we don’t need it. But don’t be fooled. Read on to see how seven of the most widespread life insurance myths are easily debunked.
MYTH #1: I’M SINGLE AND I HAVE NO DEPENDENTS. I DON’T NEED LIFE INSURANCE.
Actually, there is good reason for you to have life insurance as a single person. First, every person should have enough funds to cover their funeral costs and end-of-life medical bills. You don’t want to leave your family or executor with a legacy of debt and unpaid bills.
Second, purchasing a life insurance policy is the best way to be remembered for your generosity. You can choose your favorite cause to be the beneficiary of your death payout, helping improve the lives of others after you’re gone.
MYTH #2: I’M A STAY-AT-HOME PARENT WHO DOESN’T EARN AN INCOME. MY PARTNER NEEDS LIFE INSURANCE; I DON’T.
The tasks that fill your time will need to be outsourced to hired help if you suddenly pass on. Your better half may need to pay for cleaning help, a cook or a nanny – or maybe all three! All that costs money, and that money can come from the insurance payout from a homemaker’s policy.
MYTH #3: WHY WOULD I WASTE MONEY ON INSURANCE WHEN I CAN INVEST IT TO EARN HIGHER RETURNS?
Are you sitting on millions? Unless you can honestly answer that with a “yes,” you’re better off putting your money somewhere safe with a guaranteed payout such as a life insurance policy.
Investments are never 100% safe, and you don’t want to leave your dependents with an iffy source of funds. The only exception to this rule is for the truly wealthy who have more than $1 million in liquid assets and have their funeral costs and medical bills covered.
MYTH #4: I CAN’T AFFORD LIFE INSURANCE.
The idea that life insurance is too expensive is nonsense. A recent Life Happens study revealed that 80% of uninsured people who claimed life insurance was too expensive had overestimated its cost. A 20-year level term policy for a healthy 30-year-old usually falls in the ballpark of $150 a year. That’s peanuts compared to the benefits of having life insurance and the security of knowing your loved ones will be taken care of after you’re gone.
MYTH #5: I’M TOO YOUNG TO WORRY ABOUT LIFE INSURANCE.
Actually, there’s no better time to purchase a life insurance policy than when you’re young. The premiums are far less expensive for those under age 35, and most people in that stage of life do not have sizable assets to pass on to their dependents. Most importantly, dependents of the 25-35 age group will be too young to be financially independent and will need the death payouts for basic survival.
MYTH #6: MY CHILDREN ARE INDEPENDENT ADULTS. WHY WOULD I NEED LIFE INSURANCE?
Leaving your dependents with an inheritance that helps them purchase a home, start a business, or put some money away for a rainy day will keep you in their thoughts long after you’re gone. Also, you don’t want to burden your children with funeral expenses and medical bills when they’re grieving.
MYTH #7: MY JOB OFFERS A LIFE INSURANCE POLICY FOR EMPLOYEES. IF I LEAVE MY JOB, I CAN TAKE IT WITH ME.
Unfortunately, this is false. Most employer-offered life insurance policies are not portable. If you leave your job, for whatever reason, you’ll also be leaving your life insurance plan. No one can predict the future, and there’s no way to know you’ll remain at your current workplace forever. That’s why it’s best to purchase a separate life insurance policy, even when your employer provides you with one. Plus, buying your own policy will allow you to choose one that best suits your needs.
It’s never fun to think about what will happen after we’re gone. Taking the time to plan for end-of-life expenses, though, and leaving loved ones with enough to live on when we’ve passed, is the responsible thing to do. Don’t let a life insurance myth keep you from buying a policy! At DoverPhila Federal Credit Union, we offer affordable insurance plans to ensure your best-laid plans don't get derailed. Contact a credit union member service representative for more details, or click here.