Top 3 Myths About Life Insurance Debunked

Top 3 Myths About Life Insurance Debunked

The world is an unpredictable place, and there is often no way of knowing what is waiting around the corner. Many of us don’t consider life insurance to be something that applies to us, and see it as something reserved for the wealthy. This is a risky way of thinking, as life insurance is designed to protect those without financial stability, and will provide support for your loved ones when they need it the most. This article examines the top 3 myths about life insurance, and explains why these can lead to problems for your loved ones after your death.

Spouses Who Don’t Earn a Salary Don’t Need Insurance

If the main breadwinner in a family passes away prematurely, it can leave the surviving family members in financial difficulty. Taking out an effective life insurance policy will ensure your family are provided for in the event of your death. It is also important to consider what would happen if your spouse passed away.

If your spouse is a homemaker and looks after your children whilst you are working, you will need to consider the implications of not taking out life insurance.

You could be left with the options of having to leave work to look after your children, or paying for expensive child care. Without life insurance, this could leave you in extreme financial difficulty. Taking care of children is not the only task a homemaker performs. They also cook, clean, and keep the household running smoothly, and all of these potential expenses would need to be considered.

Insurance Is Only For Those with Children

Even if you do not have children yet, you may want them in the future, and taking out life insurance ensures financial security for your future family. If you are a couple, you will need to consider what would happen if one of you died. Could the other cope with the financial burden of your combined debt? If you are single and uninsured, your estate (insurance, investments, property) will pay off any debts you have.

If your debts are more than your total worth, your family will be expected to pay these after you’re gone. Life insurance forms part of your total financial worth, and can be used to pay off debts in the event of your death. If you are diagnosed with a terminal illness and are unable to work, some life insurance policies will pay out early. This would offer peace of mind in the event that you become critically ill.

It’s Too Expensive

Any amount of life insurance is better than none at all. As life expectancy is increasing, the price of life insurance is falling. There are many reasonably priced policies aimed at people who cannot afford to put a large amount of money aside each month. Life insurance premiums will increase dramatically if you wait for your health to deteriorate before you take out a policy. If you start putting money into a policy from a reasonably young age, you will quickly build up a sizable amount.

Some policies start from as little as $5 a month, and if you were to pay this tiny premium for 45 years, you could end up with cover well over $50,000. Not only would this ensure that you could stop working if necessary, but you would also know that your family could cope financially after your death.

These are the most prevalent misconceptions about life insurance. Unfortunately there are more, and many people leave their families open to stress and financial hardship by not providing some form of protection. Life insurance should never be left until health complications arise. If you have questions that need answering, consult with a financial adviser or life insurance provider who would be happy to help you, and give yourself the peace of mind that an effective life insurance policy can bring.

Jeff Noble is a personal finance consultant. He enjoys passing on his insights online through blogging. Get more details on other common myths, visit the link.