Debunking 9 Misconceptions About Life Insurance
Life insurance might very well be one of the most misunderstood and underutilized types of insurance in Canada. Many people either fail to see the need for it, especially when they are young or view it as an additional cost they keep putting off until it’s too late.
However, it’s one of the best ways to feel peace of mind knowing you are leaving something behind for your loved ones when you are gone. If you have put off getting life insurance because you are underestimating its importance, here we debunk the top nine misconceptions about life insurance to convince you otherwise.
1. Life insurance is not for the young
The truth here is that the younger you are when you purchase life insurance the better your rates, and the more benefits it reaps. When you are young you are less likely to be ill and so your death is farther off in the future. This is a benefit to the insurance company who doesn’t have to be as concerned about paying out a claim. As a result, they can collect more money from you and are happy to provide a fair rate. Even if you don’t have a partner or kids yet, this is the best time to establish your insurance and be prepared for the next stage of life. In fact, you can look into a Permanent cash value life insurance policy as an excellent investment option that can really increase your wealth over time.
2. My employer covers my life insurance
This is a good start for your life insurance for sure. However, most company life insurance policies are a little short on coverage. If the unthinkable happens you might not have enough to cover any debt, your mortgage, and other expenses you leave behind. With an additional, personal life insurance policy you choose the amount of coverage, so you leave enough behind for your loved ones. Also, some people assume they have life insurance through their employer when they actually don’t. So be sure you understand what is covered in your benefits.
3. I don’t work so my income won’t be missed
A mistake many couples make is to assume they don’t need life insurance for the partner who stays at home. However, the burdens left behind in the event of a partner’s death can still make an impact on your finances. Even the funeral costs alone can be more than you expect. Plus, if the partner looked after the kids, you now require childcare costs which are quite expensive in Ontario. Basic life insurance is better than none, even for someone who doesn’t contribute income to the household.
4. I have mortgage insurance to pay off the balance
Yes, this is always an excellent choice for homeowners. But remember the full amount of that claim goes directly to pay off the mortgage. Your loved ones are still short the money from your income, even if your income mostly went towards the mortgage.
A life insurance policy handles all of the unexpected expenses that come up when you are gone. This can include everything from funeral expenses to home maintenance you might have traditionally done DIY. Life insurance provides more financial security to support your family and provide peace of mind.
5. I can’t qualify because I smoke
This assumption makes sense, but it also isn’t true. There are “no medical” life insurance policies available, ideal for people who smoke, have preexisting medical conditions or who are older.
This is also the policy of choice for people with fears of undergoing medical exams. For these policies, you answer some basic questions and can have a policy in place in a few days.
6. There’s no reason for me to have life insurance
Even if you are single, the financial burden left behind following a death can be quite substantial. The funeral expenses alone can be too much for families of low income. Having no insurance policy at all is never the right choice if you leave anyone behind who will have to manage your funeral and estate.
7. It’s too hard to get life insurance
It’s easier than ever to get quotes online. You can either call and speak to an agent or fill out a form for a quick quote. As mentioned, you can opt for no medical life insurance, so you don’t have to worry about medical exams.
8. Life insurance is too expensive
Not true. You can find a life insurance policy to suit your needs. A basic policy that will leave behind enough to cover your funeral expenses is available for much less than you think. You can assess your needs and discuss them with your insurance broker to find the right policy you can afford.
9. Life insurance is a waste of money I’ll never get back
While this is true for term life insurance policies, remember your beneficiaries will need that money when you are gone. So although you won’t see the money, your loved ones will.
However, you can also opt for a Permanent cash value life insurance policy that provides tax-sheltered growth. Once you accumulate money through these policies, it can be used for the following:
- Payment towards future policy premiums
- A low-interest loan to yourself
- An investment portfolio that is low risk and accumulates wealth
- Help to supplement your retirement income
So knowing what options are available to you is the best way to invest in life insurance and enjoy the benefits while you are still alive.
Life insurance offers many benefits, even if you feel you are too young, don’t need it, can’t afford it or feel it’s money wasted on benefits you’ll never see.
A conversation with our team can help you find the right life insurance policy for your needs so you take care of your loved ones. You can also find a valuable, low-risk investment to offer wealth when you need it most.