Life insurance can be a complex subject, and just about everyone has an opinion about who does and doesn't need it, how much to buy, and what types of policies are best.
For this reason, we're listing five common myths about life insurance and an explanation for why that myth might not be true. We hope this information will provide insights that can help you decide what's right for you.
Myth 1: Life insurance through work is really all you need
Having life insurance through work is good, but many employer-sponsored plans offer small term or accidental death policies with low limits. Moreover, these policies are not typically portable, so if you leave your company or get laid off you could be left without coverage. You would then need to apply for a new policy based on your current age and health status if you wanted to remain insured.
It's important to know your policy limits because what you have through work may not be enough. Securing life insurance independent of what you have at work that can lock you into a lower rate and you won't have to worry about losing coverage if you are changing jobs.
Myth 2: If you're single or young you don't need life insurance
Even if you have no dependents, you'll still have funeral expenses that your family will need to pay when you die. You might also get married and start a family at a later date and will need to provide financial support for your spouse and dependent children.
Buying life insurance while you're young can lock you into lower rates.
Myth 3: Only the breadwinner of the family needs life insurance
A stay-at-home spouse may not earn an income, but think of all he or she does to keep the household running: child care, meal preparation, transportation, housekeeping, and more. With that spouse gone, life suddenly gets a lot more challenging - and expensive.
The cost of replacing the services provided by a stay-at-home spouse can be higher than you think. Life insurance can help defray the cost of hiring help to accommodate a new lifestyle in your partner's absence.
Myth 4: You don't need to review your coverage
Life insurance isn't a set-it-and-forget-it proposition. Every significant life event - marriage, a new baby, divorce, buying a house, retirement planning - should prompt you to double-check your coverage.
Even if you've had no big changes, it's smart to review your policy every few years to ensure that you're keeping pace with your needs and still getting the best value for your premium dollars.
Myth 5: You're better off investing your money rather than buying life insurance
You're taking a big chance when you depend solely on your investments to take care of your family. If you die without coverage, there may be no means to provide for them after your assets are depleted.
Don't bank on your assets being enough. Establishing a life insurance policy outside your investments can help ensure that your family has enough readily available cash when you die.
These are just a few of the misunderstandings about life insurance. Know the facts and don't let the myths stop you from choosing the right coverage. To get more helpful information about types of life insurance and how they can meet your needs, visit our learning center.