Life insurance is used by millions of people to provide the peace of mind they need that their families will be taken care of in the event of their death.
In spite of its popularity, there are also plenty of misunderstandings and myths surrounding life insurance which can confuse customers. To dispel them, let’s dig into some of the most common misapprehensions and unpick the truth from the fiction.
Life insurance is difficult to get
In the past, finding the right lift insurance package for your circumstances was definitely more of a challenge. But in the age of the internet, it is a breeze to compare the packages from different providers at Life Cover Quotes website so you can make up your own mind in less time.
Finding life insurance for Australians, for example, can be achieved in a matter of minutes. It’s also simple to switch providers if you find a better deal elsewhere, so there’s really no excuse to be put off by the erroneous idea that getting it is complicated.
Life insurance is only for parents
While obviously it’s helpful for people with children to have life insurance so that their debt obligations can be handled in full and their kids can be supported if they pass away, this isn’t the only group that stands to benefit.
Whether you are a singleton or in a relationship without kids right now, life insurance is a great way to protect the people you care about most from additional expenses if you die.
For example, if you own a home or you have significant personal debt, then life insurance will pay out to cover this. It’s simply not a risk worth taking.
Life insurance is too expensive
Cost can be a prohibitive factor in deciding whether or not to get life insurance, especially if you are on a tight budget or you aren’t sure you need it in the first place.
The reality is that the market is both broad and extremely competitive, so there are packages tailored to all sorts of customers.
Obviously, if you are an older individual or you have underlying health issues, then premiums will be higher. However, if you are young, healthy, and thus a low-risk prospect for insurers, then costs will be minimal, but the benefits will be significant if a claim has to be made.
Life insurance is transferable
Another mistake many people make is to assume that if they get life insurance as one of the perks from their employer, they will still be covered even if they move on to greener pastures.
This level of portability is rarely seen in the insurance industry, so be sure to either purchase an insurance policy yourself when you change jobs or check that your new employer has got you signed up to the company policy after you start.
Life insurance payouts are taxable
When large sums of money are floating around, you’d be forgiven for thinking that the taxman would want a cut of the action.
Luckily, you generally should not expect the beneficiaries of your life insurance policy to need to pay tax on whatever amount they might receive if you die and a claim needs to be made. The IRS does tax interest that accumulates on this sum, of course, so taking this into account and recognizing your obligations in all areas is wise.
If in doubt, get expert life insurance advice before you pick a policy, and check with a certified accountant so that your beneficiaries are up to speed with what to expect as well.
