Myths About Life Insurance

Contrary to popular opinion, life insurance is far from a simple policy. Myths abound about this particular product, leaving many families under the false belief that they have sufficient coverage. In truth, it is imperative to carefully assess all aspects of your policies, whether they come from your employer or a private insurer. By working through the falsehoods, you can put yourself and your loved ones in a more secure position. In some cases, you may even be able to reduce the cost of your premiums.

I Can’t Get Life Insurance Due to My Health

It is possible to find coverage if you have a chronic health condition, although it may well cost more. Insurers base premiums on 80 different facets, but by offering more detail about your condition, you may be able to achieve a lower cost. A recent letter from your healthcare provider gives underwriters an assured view of the situation, letting them create an accurate rating rather than simply hitching up premiums in error. Because insurers need to retrieve health data from a number of doctors, it may take longer to gain coverage.

Some insurers offer life insurance coverage after a set time period has past. Those who have had cardiac surgery, for example, may be able to buy insurance after six months have passed according to healthyaging.net. You might also look at insurers who specialize in policies for people with high-risk conditions. 

Single People Don’t Need Life Insurance

Life insurance offers retirees security by covering medical, funeral, and personal bills after death. This becomes important when debts are secured by others, or when singles would like to leave a charitable donation after they die.

Work Policies Are Enough

Typically, employers offer policies with coverage of up to twice your yearly earnings, offering optional increases. However, any bonuses and commissions are not included. Every individual needs different levels of coverage depending on their debts, medical and funeral bills. For some, twice an annual salary is insufficient. I nvestopedia suggests that a cash flow analysis be done to determine a precise amount based on these factors. Single people who live modestly are generally fine with twice their annual income, while those with dependents and mortgages often need more. Estate taxes should also be factored into the equation. Sites such as http://www.moneytips.com/insurance provide calculators to help you work out your ideal figure.

A Return on Premium Rider is a Necessity

ROP riders are variable and need to be chosen according to your investment goals and risk tolerance. Read all fine print carefully.

Buying Term with Investment is Best

For the majority, it makes financial sense to purchase term and use the difference to invest in a portfolio. However, in some situations, the cash value of a permanent policy is an excellent investment in itself. Those with estate taxes or relatives with special health needs may find the latter option more profitable. Similarly, those with high earnings that push them into a lofty tax bracket sometimes use permanent policies to overcome their maxed out tax advantage choices.

2 thoughts on “Myths About Life Insurance

  1. Not every insurance plan is right for you so it is important to first understand your requirement well before investing in any plan as many people invest in a wrong plan and made perspective that insurance plan is a good investment option.

Post Comment