Life Insurance: The Backup Plan You Hope You Never Need

The thought of dying isn’t the most enjoyable subject but it’s something every person needs to prepare for. If your family, business, or any other dependents rely on your income, then life insurance is the easy solution to any financial burden you may leave behind. In its simplest form, term life insurance requires you to pay a set premium for a certain length (term) that you want to be covered, and if you die during that time, the insurance company pays your beneficiaries a tax-free lump sum. Below are some common myths about life insurance:

Myth #1: Young People Don’t Need Life Insurance

It’s human nature to procrastinate, especially when it comes to planning out your future but applying for life insurance when you’re young and healthy will lock in the cost-effective rates and insurability. There is no timeline for a person’s major life events, so it’s better to be prepared before it’s too late

Myth #2: Life Insurance is only for people with kids

Even if you’re single, you still want to make sure you have enough assets to cover any debts, expenses, or bills that you could leave behind. Married couples without kids should both have life insurance to cover loans, mortgages, and any potential lost income. Stay-at-home parents are often overlooked but the economic value of their childcare and household responsibilities need to be accounted for. Business owners who are succession planning or need to protect a key employee also benefit from term life insurance

Myth #3: My job offers coverage; I don’t need it

While employer paid life insurance has benefits, it usually doesn’t offer enough benefit to adequately cover you, has limited flexibility, and may not come with you if you leave your job.

Myth #4: The application process will take too long; I don’t want to do an exam

Insurance companies have streamlined the process of quoting, applying, and approving life insurance. Advancements in technology have provided insurers with various scans, checks, and questionnaires to determine a person’s eligibility without needing a medical exam or a deep dive into medical records if healthy.

Myth #5: Companies won’t pay and if they do, it will be a huge tax burden

You may hear horror stories, but the vast majority of life insurance claims pay out without a problem if the premiums have been paid and the representations made during the application process were accurate. Life insurance pay outs come tax free to beneficiaries.

You can’t control what happens in the future so it’s best to plan today to protect the people you love. Life insurance is a step to make that happen

Written by: Jeremy Alfano

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