The Truth About Life Insurance:
9 Common Myths Debunked
Myth: It’s tough to know how much life insurance I need.
Fact: An insurance professional can help you understand coverage.
It’s important to have a life insurance policy in place to protect your family. When you’re ready to get a policy, an insurance professional can help you understand how much insurance you may need and walk you through the steps to take.
You’ll want to discuss several important factors that help determine the coverage you need, including:
Your current income.
Generally, life insurance that's at least seven to 10 times your annual salary is suggested. This rule of thumb is a good way to estimate the amount of coverage you’ll need to help ensure your family can maintain their standard of living without your income.
The term of your mortgage.
If you have a 30-year mortgage, purchasing a 30-year term policy that’s equal to or more than your mortgage amount can help your loved ones pay for this expense if the unexpected happens.
Your costs for child care, education and household needs.
Having the right amount of coverage can enable your family to stay in their home, pay for child care and household needs, or even help save for college expenses.
Any family members who may depend on you,
Whether you’re taking care of aging parents or adult children, it’s important to have coverage in place to help protect them.
Coverage for final expenses.
Funerals and final expenses can be costly – having coverage in place can help alleviate the financial impact on your family.
Myth: I have life insurance through my employer, so my family is already covered.
Fact: You shouldn’t rely solely on employer-based life insurance.
More than half of employers offer life insurance benefits to help attract and retain top employees. Even though group life insurance is an excellent benefit, it shouldn’t be your only form of coverage. Here’s why:
It’s probably not enough coverage.
Generally, life insurance that's at least seven to 10 times your annual salary is suggested. Meanwhile, the average group life policy only covers up to $100,000, which is the recommended amount for someone earning only $10,000 a year.
You may lose coverage if you change jobs.
Most group life insurance policies end if you leave your job. If you decide to convert your policy to an individual policy (in order to take it with you), then it may significantly increase in price.
Your options are limited.
Generally speaking, most group life insurance policies offer less coverage than individual policies. To get a policy that will truly protect your family, it’s best to seek additional coverage on your own to supplement your group policy.