Life Insurance 101

The subject of life insurance may not sound all that exciting, but it is an extreme benefit to those who have it.    A lot of people think that since the concept of life insurance is simple, the products are simple as well.  That is not true at all, especially today where there are so many options and riders.

Living without life insurance can be scary, is a risk that should not be taken.  One of the biggest paybacks for those who have life insurance is the peace of mind that comes along with knowing your loved ones will be protected and set financially in the case of your death.  Even if you have term insurance and don’t actually end up dying before the end of the term, the increased peace of mind is worth it.

Whether you have life insurance or not, this is applicable to you.   I am going to go over 5 common myths that you might have heard about life insurance.  In addition to your own edification, and frankly, for the safety of your loved ones’ financial futures, it’s important to understand exactly what life insurance is, what it does, and how — not to mention if — you should make a move either to purchase or upgrade your coverage. Read the myths below to see if you need to adjust your thinking when it comes to life insurance.

1. The coverage you get at work is enough.

Life insurance through your employer can be a big financial help, but usually doesn’t even come near the amount or length of coverage you need.  It is also dependent upon your employment with that company which can never be guaranteed.  The coverage you get from work may be enough, but only if you’re single, in good financial standing, have no dependents and aren’t worried about estate taxes.   For most people, the term policy offered through their employer just won’t be enough to sustain their families’ needs. After all, your insurance payout must not only support your family financially and pay for your funeral, it must also pay off any debts, such as the mortgage or car loan, as well as settle up with Uncle Sam.

2. Only the working spouse needs life insurance.

This is a curious, and completely inaccurate belief, yet it somehow persists. Life insurance on the breadwinner is there to fill in the gap left by the loss of a income, but that discounts all the valuable work a stay-at-home partner contributes to the family. How would you pay for child care, the cleaning, or even manage the household, let alone the definite costs of the funeral, without a little financial help in the event of such a loss? It can be hard to monetize the many contributions of the non-breadwinner, but to overlook them would be remiss.

3. The value of your life insurance coverage should equal two years’ salary.

Everyone’s financial circumstances are different, and so are their life insurance needs. You might require more coverage than two years’ salary if you incur medical bills or other debts, have a young family, a mortgage to pay, or any number of life obligations to meet. If you don’t have any dependents, and you don’t have a mortgage, then two years’ salary may even be excessive.  A lot also depends on what gives you peace of mind regardless of your circumstances.

4. Single people without dependents don’t need to own life insurance.

While it’s true you might not have a family to provide for, odds are you’ll still have to cover the cost of your funeral, pay off a few debts, and maybe leave a little bit behind for your parents and or close friends.  Also, using a life insurance policy to fund a gift to a favorite charity can be a wonderful legacy for a single person to leave behind.

5. You don’t need professional services to buy life insurance.

A professional life insurance agent can help you identify the needs you have, what you must protect and how best to protect it. With the knowledge of a myriad of different policies, riders, coverage amounts, prices, and benefits of different companies, a licensed agent can help you find exactly what you need for the right price.

Life insurance is an important product for most everybody to consider, but it helps if you have your facts straight. So whatever else you think you know about life insurance, you might consider running it past an agent or advisor.  If you have questions or would like a life insurance quote, contact us.

By Jimmy Hancock

5 Life Insurance Myths Busted

Life insurance may not sound all that exciting, but when you do stop to think about life insurance and you, it’s not uncommon to assume that since the concept of life insurance is simple enough, so too are the products. It’s also fairly easy to rationalize the things you really don’t understand about life insurance, and before you know it, you’re harboring potentially damaging life insurance myths.

In addition to your own edification, and frankly, for the safety of your loved ones’ financial futures, it’s important to understand exactly what life insurance is, what it does, and how — not to mention if — you should make a move either to purchase or upgrade your coverage. Read the myths below to see if you need to adjust your thinking when it comes to life insurance.

1. The coverage you get at work is enough.
While this may, in fact, be the case if you’re single, in good financial standing, have no dependents and aren’t worried about estate taxes, for most people, the term policy offered through their employer just won’t be enough to sustain their families’ needs. After all, your insurance payout must not only support your family financially, it must also pay off any debts, such as the mortgage or even the MasterCard, as well as settle up with Uncle Sam.

2. Only the working spouse needs life insurance.
This is a curious — and wildly inaccurate — belief, yet it somehow persists. Life insurance on the breadwinner is intended to fill in the gap left by the loss of a paycheck, but that discounts all the valuable work a stay-at-home partner contributes to the relationship. If you’re used to this arrangement, how would you pay for child care or the cleaning, or even manage the household without a little financial help in the event of such a loss? It can be easy to overlook the many contributions of the non-breadwinner, but to do so would be remiss.

3. The value of your life insurance coverage should equal two years’ salary.
Everyone’s financial circumstances are different, and so are their life insurance needs. You might require more coverage than two years’ salary if you incur medical bills or other debts, have a young family, a mortgage to pay, or any number of life obligations to meet. If your lifestyle is more modest and you’re not financially responsible for anyone, on the other hand, then two years’ salary may even be excessive.

4. Single people without dependents don’t need to own life insurance.
While it’s true you might not have a family to provide for, odds are you’ll still have to cover the cost of your funeral, pay off a few debts, and maybe leave a little bit behind for your parents. And as one MSNBC article on the topic suggests, using a life insurance policy to fund a gift to a favorite charity can be a wonderful legacy for a single person to leave behind.

5. You don’t need professional services to buy life insurance.
While this is, in fact true, as any consumer can go online and shop for, and even buy, term and permanent life policies, electing to go it on your own can be detrimental to your financial future. A professional life insurance agent advisor can help you identify the needs you have, what you must protect and how best to protect it. With the knowledge of a myriad of different policies, if you’re honest about your financial and life circumstances, a professional can not only help you determine how much coverage you need, but also help decide whether a term or permanent policy is right for you. They can even customize a plan to meet your unique needs.

Life insurance is an important product for most everybody to consider, but it helps if you have your facts straight. So whatever else you think you know about life insurance, you might consider running it past an agent or advisor.

Authored by Financial Social Media (financialsocialmedia.com)