For young couples just getting started, the future can seem boundless. Yet with new commitments, such as buying your first home or having children, comes the responsibility of making sure your loved ones will be provided for financially, no matter what life may bring. When you die, life insurance can help your loved ones maintain their standard of living and keep their plans for the future on track. So don’t let thee misconceptions stop you from getting the coverage you need.
MYTH NO. 1: I only need life insurance if I’m the primary breadwinner.
Whether you bring home the largest paycheck in your household or a smaller one, your family relies on your income, and it would be missed if something happened to you. Even if you don’t work outside the home, you probably need life insurance. Stay-at-home parents perform valuable services which can be costly to replace.
MYTH NO. 2: If I still need protection when the term policy ends, I can always renew the policy.
Term life insurance is popular with young families, as it typically offers the greatest coverage for the lowest cost. Term Insurance provides protection for a specific period of time (the “term”), and needs that will disappear over time, such as a mortgage or child’s education. However, many families realize that even after the kids are grown and the mortgage is paid off, their needs for insurance continues (surviving spouse income, debts, taxes, etc.). Because premium increases with age, renewing your policy when the term expires can be very expensive along with poor health making renewal impossible.
MYTH NO. 3: I only need term life insurance.
Term life insurance makes sense for many young families because their need for coverage is great and their budgets are often limited. But that doesn’t mean it’s the only type of insurance you should consider. Permanent insurance policies provide a death benefit as well as other unique features such as lifelong protection and the ability to accumulate cash values on a tax-deferred basis, similar to assets in most retirement savings plans. If these features appeal to you it might make sense to buy a large face amount term policy, giving you the death benefit protection you need, and combine it with a smaller permanent policy. When your budget permits, you can gradually increase your permanent insurance coverage.
MYTH NO. 4: I can get a better rate of return if I invest my money elsewhere.
While the most important reason for any life insurance purchase is to provide for your family, permanent insurance policies provide you with the ability to accumulate cash values that grows over time and can be borrowed against or withdrawn.* And contrary to what many people believe, long-term rates of return on cash values are generally comparable to relatively low-risk investment products.
Contact any of our life insurance agents at CSC Insurance Options with any questions you may have. We would be happy to assist you.
(*Withdrawing or borrowing funds from your policy reduces it’s cash value and death benefit if not repaid)
Contributing Source: Life Happens via GBU (The Reporter May/June 2015)