According to a 2014 Life Studies report by LIMRA, a financial industry research company, less than one quarter of middle-market consumers are comfortable with their knowledge of financial services including life insurance.
Deciphering myth from truth is a great place to gain an understanding of how life insurance can protect you and your loved ones. Check out these 7 common life insurance myths and the truth behind them.
Myth #1: Life insurance is too expensive.
BUSTED: Up to 85% of Americans overestimate the actual cost of life insurance1 and may not realize there are many options from which to choose. A $250,000 15-year level term policy for a healthy 30-year old costs just $250 a year.2
Myth #2: Only families with young children need it.
BUSTED: Life insurance can be the foundation of financial security for your family or business. Proceeds from a life insurance policy can help cover outstanding debt like a mortgage and credit cards or fund financial objectives including retirement.
Myth #3: Children don’t need life insurance.
BUSTED: Buying life insurance for children guarantees their insurability into the future and can be an affordable way to purchase additional coverage as they grow into adulthood. It’s a great way for parents and grandparents to give the young people in their lives the gift of financial security.
Myth #4: I’m young and healthy and don’t need it right now.
BUSTED: Buying life insurance when you’re young and healthy is best! You can benefit from lower rates and also ensure that you have the coverage – and financial security – you need for the long haul.
Myth #5: The life insurance I purchase at work is enough.
BUSTED: The general rule of thumb is that 5-8 times your salary is needed to replace your income if you have dependents (some experts recommend 10-12 times).3 That said, employer benefits, are often just 1-2 times the employee’s annual salary and typically end when your employment ends.
Myth #6: Term insurance can’t be converted to permanent.
BUSTED: Many term policies are renewable and convertible to a permanent policy. After holding your term policy for a set period of time, it may be possible to convert it with a special credit for doing so. The credit helps offset any increase in premium and the usual health assessment may be waived.
Myth #7: Stay-at-home parents don’t need insurance.
BUSTED: Don’t underestimate the importance of a stay-at-home parent; the value he or she adds to the financial stability of the family is substantial. If the person responsible for child care and general household management is no longer in the picture, money will be needed to cover all of those bases so you concentrate on keeping the family grounded and focused on more important things.
2 Through a Farm Bureau Financial Services agent