There is a wealth of conflicting information published on life insurance, so it’s easy to see how widespread misconceptions can arise. We delve into some of the most common myths about life insurance in order to separate fact from fiction:
It Won’t Happen To Me
Let’s face it, pondering our mortality is not the preferred pastime of anyone. But the unfortunate reality is that accidents happen. More than 1.2 million people lose their lives in automobile accidents each year across the globe. And that’s just automobile accidents. There has been an entire awards system established to pay homage to all the stupid and reckless ways individuals have shuffled off this mortal coil.
But death is not the only consideration. In far more life insurance cases, people are injured to the extent that they are unable to return to work for some period of time, and on occasion, are unable to ever return to work. If you were to become injured or die, it is important to consider how those left behind would be able to get by.
My Private Health Insurance Covers Me
There is an important distinction to be made between health insurance and life insurance. If you have private health insurance, this will provide you with valuable protection against medical expenses incurred in regards to an accident or illness. But that’s all. Private health insurance won’t cover you for any of your debts or bills, and it won’t replace lost income whilst you recover from any serious illness or injury. Conversely, your life insurance will not cover you for the costs associated with medical treatment.
It is for this reason that it is worthwhile to consider taking on comprehensive medical insurance in addition to life insurance in order to ensure there are no gaps in your coverage, so that you are completely covered, no matter what life throws at you.
Life insurance Is Only For Families With Children
Life insurance isn’t just for when you get married or when you have children or a mortgage. Having adequate life insurance can help people of all ages and from all walks of life. Whilst the need for life insurance is at its highest for people with young children, purchasing a permanent policy when you are younger and healthier can help to lock in better rates while providing more time to build cash value for whatever the future may hold.
Once You Have Life Insurance You Can Forget About It
Many people tend to purchase life insurance and then stop thinking about it, but as you go through different stages of life, your needs can often change. Major life events such as having children, starting a business, buying a house and getting married are important times to reassess your life insurance.
Conversely, as you pay off major debts like a mortgage, you may need less life insurance. By reviewing your life insurance regularly with a professional insurance agent, you can better achieve your financial goals.
It’s Okay, My Employer Provides Me With Life Insurance
If you are one of the many people that assume they are all set because they have life insurance coverage through an employer, it may pay to take a closer look at your policy. In most situations life insurance provided by an employer ends once the employment does, and does not build cash value. That’s why it’s important to review your insurance coverage periodically with a financial professional to make sure you are adequately covered, no matter what stage you are at in your life.
Only The Breadwinner Needs Life Insurance
Single income families are completely dependant on the money generated by the breadwinner, and if he or she were to die without life insurance the results could be catastrophic. Conversely, it should be considered that there is a cost in replacing the services formerly provided by a deceased homemaker. Over the past few years the costs of child care, transportation, home care and schooling have skyrocketed, and a single income may not be sufficient to keep up with household expenses and pay for child care. Both spouses should have sufficient life insurance to cover either the lost income or the economic value of lost services that would result from their deaths.
Life Insurance Costs Too Much
In actuality, life insurance is one of the most affordable forms of insurance available. Whilst the exact amount that anyone pays varies based on a number of factors, depending on your age, amount of coverage and duration term, life insurance can cost less than US$1 per day.
Insurance Companies Rarely Pay Out Claims Anyway
Probably one of the most enduring myths about life insurance, there is really no evidence supporting this. Life insurance companies pay in excess of 97 percent of all life insurance claims, with the other 3 percent generally being due to major non-disclosure of existing medical conditions. For this reason, it’s always best to disclose your complete medical history when purchasing a policy.
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