5 Common Myths About Life Insurance Debunked

When shopping for life insurance, it’s best to talk with an insurance specialist or financial advisor.  Knowing what questions to ask ahead of time will ensure that you get all the information you need. 

To help you get started, we’ve compiled a list of the most common myths vs. facts about life insurance.  With this knowledge, you’ll be better equipped to make an informed decision.

Questions to Ask About Life Insurance

The many choices available when it comes to life insurance can be confusing for most people.  Although it’s basically a policy that pays benefits to your beneficiaries, determining the right policy for your needs can be tricky.

Here are a few questions to ask when you decide to purchase life insurance:

  • What is the simple definition of life insurance?

Life insurance is a contract between a policyholder and the insurance provider.  In this contract, the insurance company promises to pay a predetermined amount to designated beneficiaries upon the death of the insured person.  In exchange, the insured person must pay monthly premiums.

  • How does life insurance work?

Typically, claims can be paid in about 30 days after the claim is filed. If you pass away during the term of the policy, your beneficiaries receive the death benefit, tax-free and may use the money however they choose.  Typical term lengths are 10, 15, 20, 25, or 30 years.

Your insurance provider will need specific documents before processing the payment.  To speed up the process, call the insurance company right away after a loved one passes away.  Make sure you’ve met all of the claim requirements and have provided the necessary supporting documents.  

  • How much life insurance do I need?

The amount of insurance you need can be determined by asking how much income would your beneficiaries or dependents need and how long they will need financial support.  You’ll also want to consider how much debt needs to be paid off and whether you want to provide for college tuition, etc.  Including enough to cover burial expenses is also a wise decision.

  • How much does it cost?

Many factors are examined when determining the cost of a life insurance policy.  For instance, the most common factors that affect life insurance rates are age, health, sex, lifestyle, and the type of policy.

  • What are the different types of life insurance policies?

The two main types of life insurance are Permanent Life and Term Life.  Several kinds of Permanent Life are available including Whole Life, Universal Life, Burial Insurance, and Survivorship Life Insurance.  

Your agent will be happy to discuss these options in detail and help you choose the best policy for your family’s needs.

Debunking 5 Myths About Life Insurance

Protecting your loved ones if you should pass away is the main reason for obtaining life insurance.  No doubt, like many people, you may be confused and intimidated by the many misconceptions about the subject.  So, let’s try to help you clear up some of the confusion.

Here are the 5 most common myths about life insurance:

Myth #1.  “People who are single, or married with no children, don’t need life insurance.”

Life insurance benefits can help other family members besides children or spouses.  The money can be used to pay off your debts so other family members don’t have to take on the burden.

Myth #2.  “Beneficiaries have to pay income taxes on the benefits they receive from my insurance.”

Generally, life insurance benefits are income-tax-free and don’t have to be reported on a beneficiary’s tax return.  However, any interest payments may be taxed.

Myth #3.  “I have plenty of savings, so I don’t need life insurance.”

Your savings may not be enough to cover funeral costs, your mortgage, and other expenses.  The median cost of a funeral today ranges from about $7,300 to $10,000 or more.  If your savings can’t cover those costs, your loved ones will be responsible for the rest.  

Myth #4.  “The insurance I have through my job is enough.”

Most people who have group insurance through their employer are underinsured. Also, if you leave your job, you lose the insurance.  It’s always a good idea to have a personal, individual policy outside of your employer’s group insurance.

Myth #5.  “Permanent life insurance is too expensive.”

If you’re young and healthy, life insurance is cheaper and easier to get.  But, if cost is still a concern, get the coverage you can afford and increase the amount later.  Older individuals may choose a final expense or burial insurance policy that is more affordable because the coverage amounts are low.

For more details on life insurance, speak with a local agent to determine what type of coverage will fit your needs.

Call Sandifer Insurance Agency for a Free Life Insurance Quote   

No one can predict what tomorrow will bring, so it’s good to know your family will be protected financially.  With that in mind, Sandifer Insurance Agency is dedicated to helping you find the right coverage for your needs.  For over 40 years, we have assisted families and businesses in Cheraw, SC, and surrounding areas get the reliable insurance protection they expect and deserve.

Whether you need home, auto, life, farm, or business insurance, we work with many top insurance providers to ensure you get the most affordable and trusted coverage available.

Contact Sandifer Insurance Agency to learn more about our services.  We will be happy to answer your questions and provide a free, no-obligation quote.  

Sources:

  • businessinsider.com/ – My work plan is enough and 5 other myths about life insurance that could cost you later

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