A Second Look at Life Insurance Myths

http://www.dreamstime.com/royalty-free-stock-images-fact-myth-red-red-sit-opposite-ends-gray-board-balanced-gray-question-mark-white-image47624429Forbes recently published a very good article about life insurance myths and facts.

Listed below are each of the myths mentioned in the article.

After each myth I made a few comments about the real facts of the situation.

Do any of them surprise you?

Myth #1: Your employer-provided life insurance is all you need.

Good points regarding employer coverage:

  1. It may not be enough;
  2. It may not be portable; and
  3. It may not be the best price.

Myth #2:  Only the breadwinner needs life insurance.

Good points regarding the stay-at-home spouse.

Money is needed to replace his or her services, as well as to allow the surviving parent to spend more time with the children.

Myth #3: Life insurance is really expensive.

People very frequently fear life insurance is too costly.

Unfortunately, a lot of this stems from brokers misleading them on prior shopping occasions.

Myth #4: My health disqualifies me from life insurance.

These are good points regarding eligibility for coverage.

I would add that since companies tend to specialize in underwriting specific risks, extraordinary offers can be made for policies that do not have coverage limits.

Myth #5: Everyone should buy term and invest the difference.

The strategy of buying term and investing the rest only works for people who really need term insurance and who can really invest the rest.

People often make changes in their financial plan as life goes along. These changes can include having an unexpected child, refinancing a mortgage, taking out an unexpected loan, or having a retirement fund underperform. All these events could call for life insurance for a longer period of time than anticipated.

In addition, people need discipline, focus, and effective management to “invest the rest”. If even one of these factors is not in place, then that strategy may very well not work.

Myth #6: You get a better deal purchasing life insurance online.

I think the Internet is not just a poor place to buy life insurance, but a poor place to even shop for life insurance.

People really have no idea how their insurability will be assessed until they deal with an expert broker.

Looking at rates on a website in the hope and prayer you qualify for them is not productive.

Myth #7: You’re too young to worry about life insurance.

Since life insurance pricing is based on age, it makes much more sense to buy it when you’re young.

In addition, buying a cash value policy early can give it enough time to accumulate significant funds.

 

 

Want to learn more?
Read my free guide, How To Get Great Life Insurance Rates and learn how you can get life insurance companies to compete for your business, at no risk or extra cost.