Life insurance is not a simple product. Even the simplest policies have many components that need a good understanding. Many people are misinformed about the reality of life coverage. Because of this, they make many mistakes. It is important to dispense some of the most common myths about life insurance, so that you can have a more realistic image about the product.
- The best life insurance is the cheapest!
Many people believe that the price is the only thing that matters when looking for an insurance policy. In fact the most important aspect of your policy is the coverage, which is the main reason for why you buy it. In many cases, extremely cheap life insurance policies offer little coverage. If the death benefit I too low, your beneficiaries will not be able to pay your funeral taxes or take care of other expenses.
- Everyone needs coverage!
This myth is popularized mostly by insurance agencies who say that everyone must have life coverage. However, this is not true. People who can cover their funeral cost and leave enough money for the families after they pass away do not necessarily need life coverage. Children and senior citizens (with a few exceptions) also fit this group.
- Only people who work need life coverage!
The idea that only the working spouse should hold an insurance policy is wrong. Although it doesn’t seem so, stay-at-home mothers or fathers play an important economic role. They take care of the children, cook, do the shopping, wash the clothes and keep the house clean. Imagine if you would pay a person for each of these services. The costs will be huge. A stay at home spouse should not go without life coverage!
- A Term life policy is best!
There are many life insurance policies available which fit different situations. Although term life coverage is one of the cheapest policies, it isn’t necessarily the best! Pick a policy that fits your financial possibilities and needs. Thinking of buying only term life coverage is not always a good idea!
- I should invest on my own, and not buy a policy!
You do not buy life insurance for your own good. Your family is the one that needs protection. Investing on your own is always risky and unless you successfully manage to get rich, your family will be in danger if you would suddenly lose your life.
