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June 3, 2020
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It’s a question that none of us wants to dwell on, but we must ask ourselves: “What happens to my family if I’m gone?” How will the funeral be paid for? How will the mortgage or rent be covered? Who will provide care for my children? Will my spouse have to work even harder amidst the grief? Or reenter the workforce?
Life insurance provides stability and helps ease the heavy burden that comes with losing a family member. Let’s look at three statements many people believe about life insurance that simply is not true…
#1 “Life Insurance Is Too Expensive”
According to NerdWallet, the misconception that life insurance is too expensive is the biggest misconception surrounding the topic. Four in five surveyed adults overestimate the price of policy – especially millennials. How much would you think a 20-year, $250,000 term life insurance policy for healthy 30-year-old costs? $400? $600? That’s what many respondents guessed. Such a policy only costs about $260 per year.
#2 “My employer-provided life insurance has me covered”
Many employers offer life insurance as a part of their benefits package. However, experts agree that these policies are usually insufficient. A typical employer-provided policy offers 1-2 times the insured’s annual salary with the ability to purchase up to 4-6 times the salary. However, many individuals’ salaries do not represent total compensation (commissions, bonuses, other sources of income, etc.). Additionally, experts recommend at least 5-8 times annual income (if not 10-12 times) at the target figure for replacing income for dependents.
#3 “Only the breadwinner in our family needs life insurance”
It’s clear that the main breadwinner needs life insurance to replace lost income, but don’t forget about stay-at-home parents or parents who work part-time. These moms and dads provide many services to the household that cost money, including childcare, housekeeping, shopping, etc. Hiring someone to fulfill these services would be a significant budget drain that life insurance could help compensate for.
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