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Yahoo
15-06-2025
- Health
- Yahoo
10 Life Insurance Myths That Could Be Costing You
Life insurance can be a powerful tool in your financial planning arsenal, but you may be missing out due to a lack of real understanding of what it is and who it's for. A number of common misconceptions about life insurance, especially around cost and eligibility, may make it seem out of reach for you when it really isn't. Read Next: Check Out: Here are 10 important facts about life insurance that you should be aware of to decide if it's a smart fit for your financial future. A common myth about life insurance is that it's too expensive for most people. 'Many people, especially younger individuals, overestimate the cost of life insurance and needlessly leave their families unprotected,' said Jack Elder, director of advanced markets at CBS Brokerage, an independent insurance brokerage firm. 'The truth is, a healthy 30-year-old can often secure a $250,000 20-year term life policy for around $13 a month.' Some employers offer life insurance as part of their benefits package, but this typically does not provide the amount of protection your beneficiaries would realistically need. Believing your employer-provided insurance is enough is a common mistake. 'These group policies typically offer a benefit equal to one or two times your annual salary, which is rarely enough to cover long-term obligations like a mortgage, outstanding debts, and future child care or college expenses,' Elder said. Explore More: A common misconception is that Medicare covers long-term care — but it doesn't. 'Approximately 70% of individuals over age 65 will require some form of long-term care services in their lifetime,' Elder said. 'Critical services like full-time skilled nursing care, memory care facilities or modifications to your home for accessibility are not covered by Medicare. A life insurance policy with a long-term care rider can be invaluable for situations like these.' Another common myth is that life insurance isn't necessary if you have savings — but that's not the full picture. 'While savings help, unexpected expenses like medical bills can deplete them,' Elder said. 'Life insurance ensures your family isn't financially burdened.' Life insurance isn't only about death benefits. 'One of the biggest misunderstandings about life insurance is that its only purpose is a death benefit,' Elder said. 'Modern permanent life insurance policies can be powerful tools for the living, allowing you to build cash value that grows tax-deferred.' Another myth is that applying for life insurance is complicated and time-consuming. 'Today's technology has streamlined the application process to reduce redundancies and remove obstacles,' said Michelle Buswell, senior vice president and chief operating officer at Legal & General America. 'Questions are built to be reflexive; the multi-hour process of years ago has been shortened to just 15 to 20 minutes for most individuals.' Many assume that if you have a preexisting medical condition, like diabetes or a heart condition, you'll be denied life insurance. 'Modern medicine and treatments have helped underwriting rules adjust with the times to provide easier access to policies for those who have certain medical conditions,' Buswell said. 'If an applicant is actively managing their conditions and/or has no comorbidities, companies take that into consideration when calculating the health classifications and premiums.' Another common myth is that life insurance is only for older people. However, it's a tool that can be useful for people of all ages. 'Age milestones don't spur [the need for] life insurance — life milestones do, i.e. getting married, having a baby or buying a home,' Buswell said. 'Purchasing a policy at a younger age or after a life event can help avoid increased premiums. 'The earlier an individual purchases a policy, the less expensive the premium will be over time,' she continued. 'More importantly, they are likely to have fewer health concerns in their 20s, which will always lower the cost of premiums. Purchasing early will serve you best.' Some people see term life insurance as a waste of money because it doesn't last forever. 'Many people dismiss term life insurance as a waste, considering it a product that offers coverage for a limited time and does not pay out if the policyholder survives the term,' said Chris Jean-Charles, a financial planner at Northwestern Mutual. 'However, this perspective misses what term life insurance provides — affordable protection tailored to short-term needs.' Jean-Charles emphasized that the working years are actually when the need for insurance is highest, since this is when you most need to protect your income. 'A term policy can ensure their family has the required financial backing in the event of an untimely death,' he said. 'The lower cost of premiums with term life insurance often makes it a feasible choice for individuals on tight budgets.' There are a number of myths surrounding who should and should not have a life insurance policy, one of them being that only the breadwinner needs life insurance. 'This is one of the most overlooked financial planning mistakes,' said Melissa Murphy Pavone, CFP, CDFA, founder and financial planner at Mindful Financial Partners. 'Just because one spouse doesn't bring in a paycheck doesn't mean their contribution doesn't have monetary value. In fact, replacing the non-working spouse's role often requires hiring multiple people: child care, transportation, housekeeping, meal prep and sometimes elder care too. 'If that spouse were to pass away, the surviving partner may face both emotional devastation and the immediate financial strain of replacing those services, often while still working full-time,' she continued. 'Life insurance for the non-earning spouse can help cover those unexpected costs and allow the surviving parent to take time off to care for children, grieve or simply adjust.' Another common belief is that life insurance is not necessary for people without children. However, if you take care of parents, siblings or a spouse, you could benefit from having a life insurance policy. 'While these loved ones may not be considered 'dependents' in the traditional sense, they often rely on that individual's income now or will in the future,' said Uziel Gomez, CFP, financial planner at Primeros Financial. 'If something were to happen, the financial impact would be very real.' More From GOBankingRates 4 Things You Should Do When Your Salary Hits $100K If a Financial Advisor Doesn't Ask These 5 Questions in Your Consult, Keep Shopping 5 Steps to Take if You Want To Create Generational Wealth Robert Kiyosaki: 5 Money Habits of People Who Retire Early This article originally appeared on 10 Life Insurance Myths That Could Be Costing You
Yahoo
15-06-2025
- Health
- Yahoo
10 Life Insurance Myths That Could Be Costing You
Life insurance can be a powerful tool in your financial planning arsenal, but you may be missing out due to a lack of real understanding of what it is and who it's for. A number of common misconceptions about life insurance, especially around cost and eligibility, may make it seem out of reach for you when it really isn't. Read Next: Check Out: Here are 10 important facts about life insurance that you should be aware of to decide if it's a smart fit for your financial future. A common myth about life insurance is that it's too expensive for most people. 'Many people, especially younger individuals, overestimate the cost of life insurance and needlessly leave their families unprotected,' said Jack Elder, director of advanced markets at CBS Brokerage, an independent insurance brokerage firm. 'The truth is, a healthy 30-year-old can often secure a $250,000 20-year term life policy for around $13 a month.' Some employers offer life insurance as part of their benefits package, but this typically does not provide the amount of protection your beneficiaries would realistically need. Believing your employer-provided insurance is enough is a common mistake. 'These group policies typically offer a benefit equal to one or two times your annual salary, which is rarely enough to cover long-term obligations like a mortgage, outstanding debts, and future child care or college expenses,' Elder said. Explore More: A common misconception is that Medicare covers long-term care — but it doesn't. 'Approximately 70% of individuals over age 65 will require some form of long-term care services in their lifetime,' Elder said. 'Critical services like full-time skilled nursing care, memory care facilities or modifications to your home for accessibility are not covered by Medicare. A life insurance policy with a long-term care rider can be invaluable for situations like these.' Another common myth is that life insurance isn't necessary if you have savings — but that's not the full picture. 'While savings help, unexpected expenses like medical bills can deplete them,' Elder said. 'Life insurance ensures your family isn't financially burdened.' Life insurance isn't only about death benefits. 'One of the biggest misunderstandings about life insurance is that its only purpose is a death benefit,' Elder said. 'Modern permanent life insurance policies can be powerful tools for the living, allowing you to build cash value that grows tax-deferred.' Another myth is that applying for life insurance is complicated and time-consuming. 'Today's technology has streamlined the application process to reduce redundancies and remove obstacles,' said Michelle Buswell, senior vice president and chief operating officer at Legal & General America. 'Questions are built to be reflexive; the multi-hour process of years ago has been shortened to just 15 to 20 minutes for most individuals.' Many assume that if you have a preexisting medical condition, like diabetes or a heart condition, you'll be denied life insurance. 'Modern medicine and treatments have helped underwriting rules adjust with the times to provide easier access to policies for those who have certain medical conditions,' Buswell said. 'If an applicant is actively managing their conditions and/or has no comorbidities, companies take that into consideration when calculating the health classifications and premiums.' Another common myth is that life insurance is only for older people. However, it's a tool that can be useful for people of all ages. 'Age milestones don't spur [the need for] life insurance — life milestones do, i.e. getting married, having a baby or buying a home,' Buswell said. 'Purchasing a policy at a younger age or after a life event can help avoid increased premiums. 'The earlier an individual purchases a policy, the less expensive the premium will be over time,' she continued. 'More importantly, they are likely to have fewer health concerns in their 20s, which will always lower the cost of premiums. Purchasing early will serve you best.' Some people see term life insurance as a waste of money because it doesn't last forever. 'Many people dismiss term life insurance as a waste, considering it a product that offers coverage for a limited time and does not pay out if the policyholder survives the term,' said Chris Jean-Charles, a financial planner at Northwestern Mutual. 'However, this perspective misses what term life insurance provides — affordable protection tailored to short-term needs.' Jean-Charles emphasized that the working years are actually when the need for insurance is highest, since this is when you most need to protect your income. 'A term policy can ensure their family has the required financial backing in the event of an untimely death,' he said. 'The lower cost of premiums with term life insurance often makes it a feasible choice for individuals on tight budgets.' There are a number of myths surrounding who should and should not have a life insurance policy, one of them being that only the breadwinner needs life insurance. 'This is one of the most overlooked financial planning mistakes,' said Melissa Murphy Pavone, CFP, CDFA, founder and financial planner at Mindful Financial Partners. 'Just because one spouse doesn't bring in a paycheck doesn't mean their contribution doesn't have monetary value. In fact, replacing the non-working spouse's role often requires hiring multiple people: child care, transportation, housekeeping, meal prep and sometimes elder care too. 'If that spouse were to pass away, the surviving partner may face both emotional devastation and the immediate financial strain of replacing those services, often while still working full-time,' she continued. 'Life insurance for the non-earning spouse can help cover those unexpected costs and allow the surviving parent to take time off to care for children, grieve or simply adjust.' Another common belief is that life insurance is not necessary for people without children. However, if you take care of parents, siblings or a spouse, you could benefit from having a life insurance policy. 'While these loved ones may not be considered 'dependents' in the traditional sense, they often rely on that individual's income now or will in the future,' said Uziel Gomez, CFP, financial planner at Primeros Financial. 'If something were to happen, the financial impact would be very real.' More From GOBankingRates 4 Things You Should Do When Your Salary Hits $100K If a Financial Advisor Doesn't Ask These 5 Questions in Your Consult, Keep Shopping 5 Steps to Take if You Want To Create Generational Wealth Robert Kiyosaki: 5 Money Habits of People Who Retire Early This article originally appeared on 10 Life Insurance Myths That Could Be Costing You Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
