Making the decision about whether or not to take out life insurance should not be taken lightly. Many people justifiably view life insurance as a complicated product that has been different layers and criteria. Whilst this somewhat widespread sentiment is an understandable concern when taking out any form of insurance, when it comes to life insurance there are a fair few myths in circulation that need to be debunked.
I have life insurance through my work, so I’m covered, right?
Not necessarily. Whilst your employer may be providing some life insurance cover, it might not include sufficient cover to pay, for example, estate taxes. It is advisable that you familiar yourself to what exactly your employer-based life insurance covers.
I am unmarried, have no partner and no offspring, surely I don’t need life cover!
One of the biggest myths regarding life insurance is that you don’t need it if you don’t have a partner of children. The truth is that everyone needs at least some life cover, to cover, at the very least, medical expenses and funeral bills.
Those who remain uninsured run the risk of passing on debts and medical and funeral expenses to their executor to deal with, thus meaning it is always a good idea to take out medical insurance, regardless of your marital status.
Only the main household earner needs to take out life insurance
The common surmise that only the family’s breadwinner needs life insurance certainly needs evaluating. The costs of supplanting the services that a deceased housewife or househusband provided may be higher than you think and it may therefore make sense to take out cover that insures against the loss of a housewife or househusband.
Wouldn’t it be shrewder and more financially sound to invest my money elsewhere instead of into life insurance?
Similarly to how it has become popular for people to invest in second properties instead of pensions, it is a common misconception that it is better to invest money in assets rather than in life insurance. The truth is that until you break even with your accumulation of assets, it is sensible to take out life coverage.
Variable universal life policies are ALWAYS favourable to straight universal life policies
Many people believe that variable universal life policies are superior to straight universal life policies. Whilst this can sometimes be true, it is not uncommon for variable subaccounts within a policy to perform fairly badly, meaning that holders will see a lower cash value than someone who holds a straight universal life package.
This article was written by financial expert Emma Duffy for Lifebroker.