Life Insurance Part 1 The Top 5 Myths Of Term Insurance

Term life insurance has many advantages. But understanding term life insurance and its benefits means sifting through the myths surrounding it; and there are many myths about it. These myths and misconceptions can result in too little coverage causing financial hardship for families suffering the loss of a loved one.

To avoid this from happening to you, we've taken a look at the most common misconceptions about life insurance to set the record straight. In this article we will explore myths around buying term and in other parts to this series we will explore permanent.

Myth #1: I don't work outside the home so I don't need life insurance.

False! Just because there's no paycheck to replace, doesn't mean life insurance is unnecessary. A policy that provides coverage for a stay-at-home parent isn’t so much about the money they bring into the household, but instead about the money they keep in the household.

In fact, have you ever considered how much it would cost to pay for childcare and housekeeping in the absence of a stay-at-home parent? Don’t underestimate how much this would require, child care is expensive and is a growing cost.

Myth #2: I'm young so odds are I won't need life insurance.

Some people are gamblers by nature and choose to take their chances by skipping out on life insurance completely. Although it is unlikely you'll die during your working years, you're not insuring for what's likely to happen but instead, for the worst-case scenario.

That's why term life is inexpensive for young, healthy people. Buying it now means you'll be providing financial security without spending a lot of money for it.

For example, online quotes show that a $250,000 10-year term policy for:

• a healthy 35-year old woman costs as little as $165 a year
• a healthy 35-year old man costs as little as $195 a year

What's more you may even be eligible for preferred life rates that mean the annual premiums are even less! Preferred rates are lower premiums - for the same coverage - offered by an insurer based on your health. The good news is that eligibility for preferred rates is common and could save you up to 30 per cent off the standard rate.

Myth #3: If it's really so cheap there must be a catch.

There's no catch to term life insurance. Your basic term life policy will offer you coverage so long as you pay your premium. You buy term insurance coverage for the duration of time you'll need life insurance, whether that's until the kids are out of school or until your mortgage is paid off. Learning the difference between term and permanent is in our other article "Life Insurance Basics".

Plus, your premiums are fixed for the length of the term. They won't increase even if the status of your health changes.

Myth #4: I don't need life insurance once my children are self-supporting and my mortgage is paid off.

Everybody's needs vary. But how would your spouse manage daily living expenses without your help? And what if your spouse outlived you by 10, even 20 years?

Even if your children are no longer living at home and you no longer have large debts, like a mortgage, there still are questions you should consider before deciding that life insurance is unneeded.

Myth #5: I have life insurance through my job. I don't need any more insurance coverage.

False. The truth is your life insurance coverage through your work may not be protecting yourself and your loved ones as much as you think. Review how much your employer-paid insurance provides and calculate whether this is enough to keep your family comfortable through the difficult times if you're not around.

What's more, when you leave your job for any reason, including retirement, your coverage usually stops.

Myth #6: It's such a hassle to get life insurance.

Thanks to the Internet, getting quotes is fast and easy. There are a number of online life quote services and usually, all you have to do is answer a few simple questions to get quotes. Sometimes, you can even buy a policy online.

Final Fact:

From the time you marry, buy your first home, start a family and enjoy retirement, having life insurance means you and your family have the security knowing you can reach the long-term financial goals you have set out.

Life policies provide you with customized coverage for your family's needs. Comparing quotes on the Internet can help you find affordable life insurance that will protect you and your family in the years to come.

Next week in part 2 we will talk about myths revolving around permanent insurance in "Life Insurance Myths Part 2".

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