Young, healthy people don’t need life insurance, right? Wrong. We debunk five common life insurance myths to help you understand how life insurance can protect you and your loved ones.
Myth 1: Life Insurance Is Too Expensive.
Many people skip life insurance because they think it’s too pricey. In fact, the 2019 Insurance Barometer study found consumers overestimated the cost of a $250,000 term life policy for a healthy 30-year-old by three times its actual cost. If you’re concerned about cost, consider a term life insurance policy. It’s generally less expensive than other types of coverage, and you can always update your level of protection later as your needs change.
Myth 2: Young, Healthy People Don’t Need Life Insurance.
Life insurance is a good idea, no matter your age. Plus, certain permanent life insurance policies have benefits you may be able to use while you’re still living. For example, whole and universal life policies provide a death benefit — the payout to your beneficiaries when you die. But you can also use the accumulated cash value to help buy a home or subsidize your retirement income. Looking for an immediate bonus? In general, the younger you are, the better your rates. Learn more about choosing the best insurance policies for young adults.
Myth 3: My Employer Offered Life Insurance Coverage Is Enough.
Don’t let this life insurance myth leave you unprotected. Many employers provide a basic life insurance benefit, often equal to one to two times your base salary. Smaller companies may offer a flat life insurance amount of, say, $50,000. That’s certainly a great benefit, but it can lead to a false sense of security. Depending on a variety of factors — age, salary, expenses, debts and future financial needs — you’ll likely need more coverage. Generally, an employer-provided life insurance policy is meant to supplement your personally owned policy and may not be portable if you change jobs.
Myth 4: Single People Without Kids Don’t Need Life Insurance.
Life insurance can help give you financial security if you’re single. For instance, proceeds from a life insurance policy can help cover outstanding credit card debt or help fund your financial goals, including retirement. Life insurance can also be used to pay for funeral expenses. And remember: Your beneficiary doesn’t have to be a relative. It could be a charity you support or an academic institution, such as your alma mater.
Myth 5: Children Don’t Need Life Insurance.
Buying life insurance coverage for children guarantees their insurability into the future, meaning your child can buy more life insurance later, no matter their health. Another benefit: Purchasing life insurance for children locks in a good rate. It’s just one way parents and grandparents can give kids the gift of financial security — one that can be used to help pay for college or use as a down payment for a home.