Life insurance can be one of the most important types of insurance you get in your lifetime. It can provide a financial cushion to help cover many things like medical bills, funeral costs, credit card debt and other bills that are left behind. And while many know the importance of life insurance, it’s not always the simplest product to understand. Here’s a list of common myths about life insurance, as well as the corresponding truths behind these ideas.
MYTH: All life insurance policies are the same.
Not true — all life insurance policies are not the same. And it’s important to understand the differences between the various types of life insurance in order to choose the protection that best fits your individual needs. While many types of life insurance exist, you can typically break it down into two main categories: term life insurance and whole life insurance (also referred to as permanent life insurance). Term life insurance has lower initial rates that can increase over the life of the policy until insurance ends, while whole life insurance helps provide a strong foundation of coverage that lasts for life. And with life insurance, it doesn’t have to be one or the other. Many discover that a combination of term life insurance and whole life insurance is maybe a good option for coverage.
MYTH: Life insurance is expensive.
In today’s world, there is life insurance for most needs and budgets. Term life insurance may be a way to get the maximum coverage to meet your family's changing needs. This type of life insurance typically features premiums that increase at regular intervals until coverage ends. With whole life insurance, your premiums are usually higher than term insurance, but usually don’t increase during the life of the policy. Premiums for both types of life insurance are based on your age at issue. There’s an advantage to securing coverage at an early age; the younger you are – the lower your premium will be.
MYTH: It’s hard to qualify for life insurance.
Many believe that applying for life insurance requires a long process that includes medical tests, lab work and heavy paperwork. But this isn’t always true. You can choose a life insurance policy with simplified underwriting, which allows you to secure protection without having to visit a doctor or take a medical exam. All you have to do is provide - or give the insurance company permission to obtain - some general health information to get coverage quickly. Often times, life insurance with no medical exam is available online or through the mail.
MYTH: Life insurance through your employer is enough.
The amount of life insurance you need depends on your individual situation. Assess the funds you have in place combined with your employer-sponsored life insurance policy to ensure it’s enough to cover your family’s needs. Also, consider that life insurance through an employer may not last past retirement. In many situations, it may be a good idea to secure a supplemental form of life insurance to make sure you’re fully protected for as long as you need.
MYTH: You don’t need to revisit your life insurance policy after you purchase it.
Many times people purchase life insurance and forget about it. But this shouldn’t be the case. It’s important to review your coverage periodically, and make sure it’s enough to meet your needs that may change overtime. Additionally, you should always revisit your policy following significant life events such as marriage or divorce, births and the death of a family member. Often times, events like these may require an update to your policy. It could be a change to your contact information, beneficiary or other personal records.
MYTH: It doesn’t matter who you purchase life insurance from.
It does matter! Choose a life insurance provider you can trust. When shopping for coverage, look for a stable company with strong financial strength ratings from the top independent rating services, including A.M. Best, Fitch, Standard & Poor’s, and Moody’s Investors Service. Your family relies on your life insurance — so you’ll want to have the added peace of mind in knowing that your life insurance provider will be around when they need it most.
This article is provided by New York Life Insurance Company for informational purposes only. This article is not intended to provide tax, legal, financial or accounting advice. Please consult your own professional for advice specific to your circumstances.