10 Myths About Life Insurance
Let's face it; life insurance is not an easy product to understand. It started out to be a simple concept, but as time passed and people's needs have changed the products have kept evolving. As people tend to avoid discussing life insurance, most people start to believe in insurance myths. Here we bust a few of the most popular life insurance myths to separate fact from fiction.
Myth #1 - I Don't Have Dependents And I'm Single - I Don't Need Life Insurance
Even though you are single and have no dependents, you still have debts, funeral bills and unpaid expenses. A life insurance is a good way to cover those expenses in case you meet your untimely death. Otherwise, your death will become a burden to your loved ones.
Myth #2 - Coverage Must Be Twice My Yearly Salary
This is an old practice that needs to be updated. Your annual salary has nothing to do with the coverage you need. Analysing your cash flow is a better starting point in determining the kind of coverage you need. An life insurance agents online can help you with this.
Myth #3 - The Term Life Insurance That My Employer Provides Is Sufficient
Well, this isn't exactly wrong, but it’s not completely right. It could be close to being true if you are a single and have low expenses. However, if you are married and/or have dependents, it’s most likely that the term life insurance that your employer provides is not sufficient.
Myth #4 - Premiums Are Deductible
In most cases, this is not true. The only case this will be true if the policyholder is self-employed and he/she is using the coverage as a form of asset protection.
Myth #5 - Life Insurance Is A Must For Everyone
This tends to be true, but not always. For those individuals that have no debt, no dependents and good amount of assets then life insurance is not always necessary.
Myth #6 - Term Life Insurance Is ALWAYS Better If I Invest The Difference When Compared To Whole Life Insurance.
This really depends on your age. For younger individuals, this may be true. But for older individuals, term life insurance costs may be so high that it makes better sense to invest in a permanent life insurance.
Myth #7 - Variable Universal Life Insurance Is ALWAYS Better Than Straight Universal Life Insurance
See the trend here? There is no such thing as ALWAY OR MUST in life insurance. If the sub-accounts within the Variable Universal Life Insurance underperforms, then it's possible that the policyholder will end up with a lower cash value when compared to getting a Straight Universal Life Insurance.
Myth #8 - Breadwinners Are The Only Ones That Need Insurance Coverage
This is not really true. A life insurance is a way to soften the blow of any financial problems in case someone dies. Even if your spouse is at home, his or her death would mean you have to hire daycare, cleaning costs and such. Also, your spouse may have unpaid bills, debts and let’s not forget about the funeral costs.
Myth #9 - Return-Of-Premium Is A Must For Any Term Life Insurance Policy
It may be a good idea, but it's not exactly true. It really depends on your investment options and objectives, and also your level of risk tolerance.
Myth #10 - Investing Money Is Better Than Life Insurance
This is a really dangerous myth. Unless you have gained enough liquid assets, you will need life insurance to protect your downside.
There are a lot of variables when it comes to life insurance policies in New Zealand. Life insurance advice that is given to your friend may work for them but be terrible advice for your situation. The bottom line is you will need a professional to help you navigate through the maze of life insurance products. Now you can compare NZ life insurance policies online www.discountlife.co.nz. We have professionals ready to answer your questions and give you free of charge life insurance advice specially tailored to your circumstances.
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