4 Myths That Could Leave Your Loved Ones Unprotected
Important Facts About Life Insurance
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When you’re just starting out, it often seems that a dollar never stretches far enough. And with new commitments, such as buying your first home or having children, comes the responsibility to make sure your loved ones will be provided for financially, no matter what life may bring.
If you were to die unexpectedly, life insurance is there to make sure your loved ones can maintain their standard of living, stay in your home, send your kids to the same schools and keep their plans for the future on track. It also gives the grieving spouse or partner time to make decisions, or in some cases find work outside the home, without worrying about finances. But common misconceptions often prevent young families from purchasing the life insurance they need.
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I only need life insurance if I’m the primary breadwinner in my family:
Whether you bring home the largest paycheck in your household or a smaller one, your family relies on your income to maintain its quality of life, and it would be missed if something were to happen to you.
Even if you don’t work outside of the home, having life insurance is a smart choice. Stay-at-home parents perform valuable services such as childcare, cooking, housecleaning and household management, which can be costly to replace for a surviving spouse or partner.
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I don't need to purchase life insurance, I have a policy through my employer
: One of the great perks of having a full-time job with a good company is the benefits package that comes with it. Often, those benefits include life insurance coverage, which is great. Everyone who can get it should take it.
However, it's important to know the disadvantages and why you should still purchase a separate life insurance policy. For example, if your job situation changes, you'll lose your coverage. In other words, if you get laid off, have your hours reduced, lose or change your job, your family could be without coverage. Another common thing that can happen is your employer can decide to change or terminate your coverage and depending upon your age, and other factors this can make it difficult to secure your own policy if that should happen.
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I only need term life insurance:
Term Life Insurance makes sense for many young families because their need for coverage is great and their budgets are often limited. But that doesn’t mean it’s the only type of insurance you should consider.
Permanent life insurance policies provide life-long protection with a tax-free death benefit to help those left behind with last expenses and taxes related to the estate and inheritances. In addition, it includes other unique features such as the ability to accumulate cash value on a tax-deferred basis, similar to assets in most retirement-savings plans. You can access the cash value for important uses like a child's education or a business opportunity. (Keep in mind, however, that withdrawing or borrowing funds from your policy will reduce its cash value and death benefit if not repaid).
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If I buy a term life insurance policy and find that I still need protection when the term ends, I can always renew the policy.
Term policies are quite popular with many young families, and for good reason: They typically offer the greatest coverage for the lowest cost. Term insurance provides protection for a specific period of time (the “term”), and can be ideal for people who feel they have financial needs to cover that will disappear over time, such as a mortgage or a child’s education.
However, many families realize that even after the kids are grown and the mortgage is paid off, their need for insurance continues—to provide income for a surviving spouse, eliminate debts, pay taxes, etc. Because life insurance premiums increase with age, renewing your policy when the term expires can be very expensive. Moreover, poor health may make renewal impossible.
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Megan Maruzo
- Life & Disability Insurance Specialist
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If you have any questions
or would like to schedule an appointment to discuss your life insurance needs,
I'm always happy to help!
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