7 myths and facts about Life insurance you must know

People buy life insurance for an assurance that the beneficiaries will obtain financing sufficient for their living standard when the policy holder passes away. The beneficiaries refer to the individuals designated to receive the money coming from life insurance policies after death. It is called as the death benefit.
Aside from these concepts, there are still other things to know which are the facts and myths about life insurance. Many people tend to have different understanding or interpretation of particular information. This time, you are going to learn about life insurance myths and facts.

Myth 1: You do not need life insurance since you are just a stay-at-home parent.
This is not true because stay-at-home parents are typically working hard for their family. They do all the cleaning, cooking and laundry. If they die unexpectedly, it will be hard for their spouse to pay somebody else to do the same services for their family.

Myth 2: All people should buy life insurance.
It is tricky but this is false information. You do not need this insurance when your asset value pays off your debts, covers funeral expenses including the costs of estate settlement. It may be true in theory, however, it is not the case for many people.

Myth 3: Only breadwinners can avail life insurance.
It is actually one of the most common mistakes. For single and young, life insurance pay outs involve cost of estate settlement, funeral expense, and unpaid medical bills that might be left behind. For those who are married with no children, their partner will rely on the joint income in order to pay for the debt and maintain the living standards that they are accustomed to.

Myth 4: Investing money is better than paying life insurance premiums monthly.
The life insurance policy pays out the entire benefit amount right away, even though you only pay premiums for one year. Thus, when unexpected things happen and you passed away, you know that your family will be safe and worry free from great financial priorities.

Myth 5: You do not have to think about your life insurance policy after buying one.
Other people commit this wrong perception about buying life insurance policies. The benefit amount of the life insurance has been computed based on the liabilities and assets during the time you bought the cover. The circumstances change while other changes affect the cover amount needed. Some of the situations in which it applies are marriage, divorce, and birth of your child. Thus, you should review the policy every six to twelve months or every time such changes take place.

Myth 6: My kids need life insurance
Life insurance is meant to financially help the dependents( including children, spouse, parents etc) of the deceased. And since generally children do not earn, it’s generally recommended to insure parents with life and disability insurance.

Myth 7: Invest three-to-four times your income in life insurance
This is another myth that many people believe in. Please be aware that you can withdraw at max five percent per year from the life insurance proceeds, as per Life and Health Foundation of America. This amount may not be enough for your dependents ones.

When it comes to the number of beneficiaries to designate, you may include one or more. Make sure that you can successfully divide your money especially when you got more than one. Try to select a contingent or secondary beneficiary to get the money just in case your primary beneficiaries passed away before you. Keep in mind that life insurance is not all about investment. It is about paying the guaranteed benefit of death.

Posted in Life Insurance

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