Existence Insurance Myths And Misconceptions
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Deciding on what life insurance policies to purchase is not an easy task. Both term and permanent policies have many components that must be contemplated before agreeing to terms and conditions. many people have certain perspectives and beliefs about life insurance policies that are distorted or untrue. below are some common myths that are explained.
- Purchase Term & Invest The Difference - This doesn't always hold true. Everyone's personal financial situation is different and term insurance premiums become higher in the later years. Rates are always varying and many times permanent policy premiums are less expensive in the long run.
- Online Policies Are Cheaper - Every insurance company has an online presence. many insurance companies use the internet as a marketing platform, this doesn't have anything to do with rates. a local insurance agency can deliver the same quote on a policy if they are licensed with the same insurer. Every companies rates are constantly changing, so a person should shop around to find the best rates.
- Single People Do not need Coverage - Every policy can be tailored to an applicants needs. Families or breadwinners aren't the only ones who need life insurance polices. even if you are single and currently have unpaid expenses (mortgage, bills, funeral costs, etc.), life insurance can cover those costs when you pass. No one will want to leave their families with debts to pay off when they pass on.
- Policy Premiums Can be Negotiated - Premium prices cannot be bargained down to a lower price. Policy premium prices are determined by actuaries who solve complex formulas from past insurance policies and pay outs. Agents are representatives of the insurance company and have no control over prices.
- Everyone Needs To Purchase Life Insurance - Life insurance is designed to pay off expenses when a life expires and may have other benefits depending on the policy. People who are financially stable enough to where final expenses will not be an issue upon death, do not need the coverage.
- Only Wage Earners of a Family need To Purchase a Policy - Life insurance is designed to cover costs when a person passes. Business partners should look into purchasing a policy, so if one passes then the incurred losses can be covered. Also, if the homemaker passes, their everyday services of up keeping the home can be very costly when considering daycare and maid services.
- Cost of Premiums Are Tax Deductible - In most cases, life insurance premiums are not tax deductible. There are certain exceptions when life insurance is purchased for business reasons. Tax laws differ everywhere and should be investigated with a licensed tax accountant in your area.
- Smokers or People with bad Health cannot Obtain Life Insurance - Insurance agencies will assign applicants into certain categories based on their health, medical history, habits, lifestyle, etc. If an applicant is placed in a high risk category, then premiums will go up. an applicant who is a smoker or has horrible health, may still receive a policy, but will pay excessively higher premiums than those who are in good health.
- Life Insurance Policies Costs too Much - Policies are much cheaper than the average consumer thinks. For example, rates for a healthy 30-year old male who wants a 20-year term $250k policy will be looking to pay around $15 a month. That's right around fifty cents a day to protect your personal estate. Rates are also cheaper if purchased at a younger age where the applicant can lock in a set rate.
- Coverage provided by Employers Is Sufficient - Depending on the size of the company you work for and their policy plan, it may not be enough. often, employers who do provide a group policy, only offer coverage from 1-2 times their salary. more often than not, it is recommended to purchase at least three times your annual salary. Also, if the company folds or a your job is terminated, you will not be covered in a time where it's needed most.
These are some of the common misunderstanding that are associated with life insurance policies. If you have a question regarding a policy, contact a local insurance agent and they will explain the coverage terms to you. Life insurance is a great product for those needing to protect their personal estates. Budget your money accordingly and plan for your future wisely.
Life Insurance Myths And Misconceptions
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