Do you ever worry if your family will be okay financially when you’re gone? If there will be enough to pay the bills? Enough money for them to maintain their current standard of living? These worries are common and it’s the reason people buy life insurance.
Life insurance can cover everything from burial and final expenses for handling the estate, replacing lost income for your family, and/or paying off a mortgage and other debt that you may leave behind. The more of these bills that are covered in a life insurance plan, the less financial strain on your family.
Even though life insurance is important, there are a lot of misconceptions about life insurance. Here are 3 of the most popular myths about life insurance.
Finance site NerdWallet ranks expense as the biggest misconception about life insurance. The site says 80% of those it surveyed overestimated the price of a policy.
“That is particularly the case for millennials, who overestimated the cost by 213% on average, and Gen Xers, who overestimated by 119%. When asked the annual price for a 20-year, $250,000 term life insurance policy for a healthy 30-year-old, respondents gave a median estimate of $400. Millennials put it at $600. The actual price is about $160 annually.”
Employer-Provided Life Insurance is Enough
It’s great if your employer offers this as part of their benefits package, but many experts agree employer-provided life insurance will not be enough. As Forbes explains: “your employer may provide you with life insurance equal to 1-2 times your annual salary and you may even be able to purchase up to 4-6 times your salary. But there are several problems with that. First, your “salary” doesn’t typically include commissions, bonuses, and second incomes. Second, to replace your income for dependents, you generally need at least 5-8 times your income and some experts even recommend 10-12 times.
Only the Primary Breadwinner Needs Life Insurance
If your family dynamic includes one parent working full-time and the other parent as the primary caretaker of the children, don’t assume that only the “breadwinner” should be insured. Why? The stay-at-home parent takes care of a lot of things that cost money, such as childcare, housework, errands, possibly even also caring for an elderly member of the family. All of these things are expensive and would be a financial burden on the surviving parent.
For help getting life insurance for your family, talk with your local insurance agent Ed Underwood.
This information is brought to you by local State Farm Agent, Ed Underwood. Click here to get a quote or call 615-771-0700 to get information on adding your teen to your insurance plan. Like Ed Underwood on Facebook!