If the very idea of buying life insurance is stressing you out, this article will help you get some tips on how to fully understand some of the basics of life insurance planning. Because confusion can lead to critical information being missed, we explain how to avoid five common misconceptions about life insurance.
My group insurance is sufficient
First, the coverage provided by your employer’s group insurance is unfortunately almost never sufficient to protect your family in the event of your death. In addition, group insurance coverage ceases as soon as you are no longer employed by your employer, and few workers today enjoy full job security. Although most group insurance plans offer an option to convert group life insurance to personal life insurance upon termination of employment, this is rarely the ideal time to add new expenses to the family budget. Also, at an older age, taking out new personal life insurance can be costly. A professional insurance advisor can show you how to harmonize group insurance and personal insurance to ensure full and complete protection, in all circumstances, of your family’s standard of living and plans.
I already have ample coverage
Second, not carrying enough life insurance is an all too common problem for many people. Most people underestimate how much money will be needed to ensure their family’s financial security in the event of their death. There are common rules of thumb that are used to establish the coverage a family will need, such as multiplying personal income by ten, but these rules are rarely exact. Read our previous article, Life insurance and financial protection , for a basic explanation of how much cover your family might need.
Term insurance offers the least expensive coverage
Term insurance is popular among young people because the premiums are relatively low. As the term suggests, term insurance protects you against the financial impact of death for a set period of time. It is the preferred type of insurance for parents who wish to support their children financially for 5, 10 or 20 years in the event that they die while the children are still in their care. That being said, while term insurance comes with many benefits like low premiums, those premiums will increase exponentially once the chosen coverage period is over. Although term insurance still has a place in many people’s lives, if you want long-term coverage, it is not financially profitable to take out only temporary insurance. To learn more about which type of insurance is right for you, watch this video The SMART TALK Series: Choosing the Right Insurance .
4 I took out a policy, my work is done
Purchasing life insurance is probably the most important buying decision you will ever make. Once you’ve taken out your policy, it’s crucial that you review your policy and contract every three years to make sure they still suit your lifestyle and needs. For example, if your beneficiary is a deceased or separated spouse, you will need to change your beneficiary designation to ensure that your death benefit is paid to the correct person. You will therefore need to check whether the policy you have taken out still meets your current needs and your anticipated future needs. For this reason, we recommend that you take out a life insurance policy that can be adapted to the changes in your life and the evolution of your lifestyle. Check out this article on our pageEquiBuild to better understand flexible life insurance options.
I have plenty of time to buy life insurance
Because there is a strong correlation between your age, health, lifestyle, and life insurance premiums, waiting too long to purchase life insurance can be a costly mistake. The younger you are and the healthier you are, the lower your term and permanent insurance premiums will be. In this video The SMART TALK Series: Insurance , you will learn about some insurance needs that you will likely have throughout your life. In addition, this video will make you aware of the importance of establishing an affordable and flexible insurance plan from a young age to protect you in all the adventures of your life
