The Biggest Myths of Term Life Insurance

By | March 27, 2013

When looking for life insurance policies, you will find many people willing to share what they know. The problem with this is many people don’t get their information from a financial planner. Many of the things you will be told are myths about term life insurance. The insurance salesman will tell you anything to get you purchase their product don’t get stuck with a policy that doesn’t fit your budget or needs.

Save Money with Term Life Insurance

Many people will tell you that it is better to buy term life insurance and then invest the money you aren’t paying on your premium. This may seem like a great idea but in reality there are two major flaws with this theory. The first is that term life insurance is only valid for a set amount of time. Premiums increase with age and when it is time to purchase a new policy you will end up paying more. The second is that investments do not always make enough money to cover the difference in benefits from other insurance plans.

The Policy from Work Is Enough

This is the second biggest myth you will hear about term life insurance. Back when people worked for the same company from the time they started working until the day they died, this idea may have been true. In today’s market where there are layoffs and people frequently change jobs, employer provided insurance is not enough. Employers generally purchase term life insurance as a group policy. This means if you leave your job for any reason you will lose your life insurance. Even if your job pays for you to have a term life insurance policy it is a good idea to purchase your own policy as well.

Can’t Afford It

Many people will say that they cannot afford to pay the premium for a life insurance policy. Term life insurance policies are one of the most affordable life insurance policies available. The amount of your monthly premium could end up less than you would spend on dinner and a movie. The best way to find out how much a term life insurance policy would cost is to speak with a financial adviser or insurance sales person.

Don’t Need It

Many people, especially those who are younger, feel that life insurance is a waste of money. The truth of the matter is unless you have saved enough money for a funeral and have no dependents you will need life insurance. People who have dependents should have enough life insurance coverage to cover not only the funeral but also cover expenses that would normal be covered by their salary. Another myth in this group is that if you aren’t the person bringing home the paycheck you don’t need life insurance. Actually the costs of losing the homemaker of the family can be just as expensive as losing the money maker of the family.

Can’t be Converted

Because a term life policy expires after a set amount of time, many people think that you can’t convert it to a permanent life insurance policy. Actually the opposite is true; many companies are now offering an option that allows the policy to be converted to a permanent policy if needed. This option is a great choice for those who may need to extend the term of their policy without risking a premium increase.

Yakezie Carnival at Family Money Values