Most people recognize the need for life insurance – but many of them still don’t have it. Why?
People offer a variety of rationales for remaining uninsured. But these reasons may just be myths. Here are a few of them:
• “I’m single (or married with no children), so I don’t need life insurance.” Even if you’re single, you may still have financial obligations that could be met by life insurance proceeds if something happened to you. Perhaps you have taken out some loans with a co-signer who would be on the hook for the balance, or maybe you have a business partner who might be in trouble without your resources. And if you’re married but don’t have children, you’d still want to provide support for your spouse, particularly if student loans or a mortgage is involved.
• “Life insurance is too expensive.” Different types of insurance carry different costs. If you purchase permanent insurance, such as whole life or universal life, your premiums are paying for a death benefit and a savings component. Consequently, this type of policy is more expensive than term insurance, which just provides a death benefit for a certain number of years. Term insurance is usually quite affordable, and, generally speaking, the younger you are, the less expensive the policy – and, of course, you can shop around for the best rates.
• “I get enough life insurance through my employer.” Many employers do offer life insurance as an employee benefit, but there are two possible issues with this coverage. First, it may be for a minimal amount and not enough for your needs, especially if you have several dependents. And second, an employer’s life insurance policy is not necessarily portable – if you leave your job, you might lose your coverage.
• “I have a pre-existing condition, so I’m sure I couldn’t get life insurance.” Some pre-existing conditions don’t automatically disqualify you from getting life insurance, although you might end up paying higher premiums than someone without any health issues. In any case, it’s a good idea to look at what various companies might offer, as insurers use somewhat different underwriting processes and may view pre-existing conditions differently.
• “Insurers don’t want to pay out the proceeds.” Actually, there’s a fairly straightforward process for paying out death benefits. Your beneficiaries must file a claim and submit the death certificate – and that’s about it. An insurer must have a strong reason to deny a claim, and, in fact, the company is typically motivated to pay as soon as possible to avoid incurring interest charges for delayed payments.
Don’t let any of these myths deter you from obtaining life insurance. Then, when you’re ready to act, you’ll need to ask some questions: How much coverage do I need? Should I get term or permanent insurance? How should I designate my beneficiaries? You may want to work with a financial professional to determine the type and amount of insurance you need. Once you’ve gotten your coverage in place, you’ll know that you’ve done what you could to help protect your loved ones – and that’s no myth.
[Arnetta Tolley, Financial Advisor Edward Jones Investments 626-744-2740 or email@example.com]