Life Insurance can be a tricky topic and often times people are not really sure what they should be buying when it come to a life insurance plan. This misunderstanding has led to a significant portion of the population being left uncovered or inadequately covered by their life insurance plans. I found this great article which outlines some myths of life insurance that I thought would be important to share. Hopefully these facts below will help you understand the true reality of life insurance and how you can best protect you and your family.
1) Group life insurance coverage through work is not always enough. Although rates can be lower through group coverage, people insuraged only through group life insurance have the lowest average amount of coverage and often need supplemental coverage.
2) If you lose your job then you lose the life insurance coverage provided through your employer. While some states require providers to offer the option of rolling over term coverage into an individual policy, not all states do. Make sure that if you lose your job that you ensure you are properly covered going forward.
3) Most people think that when the have their first kid is when they need to purchase life insurance. However, 72% of married workers actually have life insurance and just 75% of married couples with young children have life insurance.
4) Many people think that you have to pay taxes on the death benefit from a life insurance policy, however, in almost all situations, benefits paid upon death are not taxed.
5) A common belief is that if you don’t have children then you don’t need life insurance. Life insurance is important for anyone who provides for others, regardless of if you have children or not. If you have large private student loans, you are supporting your partner or other family members, or you share a mortgage with a partner, then life insurance is a good idea. For those with children, however, a life insurance policy should be a necessity.
6) Most people are offered life insurance plans through their employer. In fact, 56% of all workers had group life insurance coverage through their employers in 2010.