In this month's post we’re talking myths about life insurance. Life insurance can feel confusing with all the different opinions out there, online chatter, different types of plans. There are a lot of myths about it. Here are 5 myths we come across along with the reality of each question:
MYTH #1: Life insurance is too expensive. For many people, especially younger or healthy applicants, term life can cost way less than popular monthly subscriptions. Recently we quoted a client for $750,000 death benefit and a 20-year term. For the husband the quote came in at $749/year. For the wife it came in at $486/year. Both clients are 42 years old. Starting sooner than later locks in a lower rate for decades. Even if you’re not in perfect health there are still options.
MYTH #2: Only older people need it. The younger you are the less expensive coverage runs. If you read the news you’ll regularly see younger people dying, not just older people. Younger adults can use life insurance to protect a partner, cover shared debts (e.g., mortgage). Waiting to get life insurance not only increases the rate, but it also increases the risk.
MYTH #3: I’m healthy so I don’t need it. The reality is, life insurance isn’t about predicting the future. It’s about protecting against the unpredictable. Being healthy today doesn’t guarantee health tomorrow. Coverage purchased while you’re healthy qualifies you for better rates and will be far more affordable than trying to buy it after a diagnosis or health change. A number of years ago I met with a couple and introduced life insurance. “No, we’re not interested. We’re both in good shape.” About five months later the same couple came back to the office. I noticed a white bandaged area on her nose. They said “We’d like to talk about life insurance. My wife has a flesh-eating disease now and it’s attached to her nose.” Five months prior she could have had life insurance. Five months later no company would write it. Getting life insurance, while healthy, is the best time.
MYTH #4: It’s too complicated. The basics are really quite simple. “Term Life” is coverage for a set length of time or term, generally costs less and allows for larger death benefits. “Whole Life” is lifelong coverage, with potential accessible cash value and is more flexible for long-term planning. Both can also offer “living benefits.” There are many shades of life insurance, but we can help decipher your needs and help you select the best option.
MYTH #5: My employer’s coverage is enough. Many employer policies cap benefits at 1 – 2 times your annual salary. But what happens if you get laid off or if you switch jobs? That coverage ends. From a financial perspective, 1-2 times your annual salary (if you’re lucky) may not be adequate when you consider mortgage balance, childcare costs, education and future plans. We recommend setting up your own personal life insurance policy as it’s portable, customizable and sized to your life.
“I can buy later” or “All policies are the same” or “I’ll just use my savings” are all myths we hear. We suggest calling us at 720-335-6872. We’ll start with your goals and from there we can point to you some policy options and show you side-by-side costs of top companies.
Bottom Line: Life insurance is more accessible, affordable and adaptable. Don’t let the myths and misinformation out there dissuade you. If nothing else call us to discuss and we can provide you with some quotes so you can discern between the myths and reality.
