Life insurance is one of the most neglected parts of a person’s financial planning. Though life insurance is used by millions around the world, yet there are very few people who understand its importance. Majority of the masses are ignorant of the financial jargon related to life insurance and don’t have the urge to know about them. This lack of awareness gives birth to rumors. People blindly follow these rumors which get established in the society as myths. Once these myths take roots in the society, these are next to impossible to get rid of. Myths have the power to initiate a new trend and break the previous one. This is why this article is dedicated to demystify the myths of life insurance.
1) Myth: Life insurance is not for the unemployed.
Truth: You may not be employed but that doesn't undermine the need to have life insurance coverage for yourself. This is because in the absence of parents, the cost of house maintenance and childcare may run into several thousand dollars annually. Many parents are reluctant to buy a life insurance because they cannot afford to pay the annual premiums.
However, when these people are employed, they should calculate their family’s monthly expenses and buy an insurance policy of that amount.
2) Myth: Life insurance – The costlier, the better
Truth: This is not case at all. On the other hand, it is better to buy cheap term insurance than buying the expensive ones. Basically, this kind of insurance does not require any extra investment. Pay your premiums on time and you’ll get your coverage. This is why it is also known as “pure” insurance. You can purchase term life insurance based on your requirement. This means you can decide for how long you want the policy to cover you. For instance, you can take term life insurance policy which will provide coverage till your children are independent or till the time of your retirement.
These kinds of insurance policies are very profitable because the premiums remain constant for about 30 years. Another advantage of it is, you are given the flexibility to change the term. All you have to do is to stop paying the premium that will result in the termination of your policy. However, it is costly to extend the term of this kind of insurance.
3) Myth: Every living human being must have life insurance coverage.
Truth: It is not at all necessary to have life insurance coverage for everyone living on this Earth. The main objective to purchase this policy is to make oneself feel more secure financially. It acts as an alternative source of income in the event of loss of job.
4) Myth: It is quite harassing to get a life insurance
Truth: This was true to some extent, until Internet simplified the entire process of obtaining a life insurance. If you search the Internet, then you’ll get countless insurance quotes within a couple of minutes. There are several reputable insurance companies to purchase a policy. Do a thorough research of the insurance company you want to purchase and get the insurance quotes from them instantly.
Compare that quote with other online insurance quotes before making the final decision. It is better to consult a trusted insurance agent in this matter. On the other hand, many insurance companies have online forms. You can download them, fill it up and send you application directly over the Internet. However, you should verify the insurance company’s market reputation and look for certifications from Internet based business rating organizations like Better Business Bureau (BBB).
Lastly, there are a lot of myths which is not possible to discuss here. However, you must know the truths because buying a wrong life insurance policy may get you in debt.
