Some young families find the idea of life insurance quite repulsive as they don’t want to talk about “death”. People consider it “death insurance” as you will not live yourself to collect it.
All of this has led to certain myths around life insurance. So let’s analyze them and debunk their importance related to young families.
Myth 1: Life insurance is needed for primary breadwinner of family only
If you aren’t the primary breadwinner of your family, it’s still important that you have life insurance. In case of any mishap, your family will be deprived of that small income. Even being a stay-home parent getting life insurance is recommended as stay-home parents provide valuable services and manage the household quite well.
Myth 2: I can renew my term insurance policy when I will need it
Term policies have gained immense popularity amongst young families as they offer maximum coverage within minimum budget. You will be provided protection for only a specific period.
Families that feel they have temporary requirements are best suited for this option. Paying for child’s education or paying off mortgage are some of these financial needs that will disappear over time.
However, most families realize that after paying for temporary needs, they still need coverage for other expenses. Renewing your policy after the term ends can cause a dent within your pocket as premium increase with age. Also, having poor health at a later stage will diminish your chances to get quality health insurance.
Myth 3: I require only time life insurance
Term life insurance undoubtedly offers quality coverage for young families with minimal income sources. However, it doesn’t mean that you should only consider this form of life insurance policy.
Permanent life insurance policies provide lifelong protection and will produce significant cash value over time. Cash value increases on tax-deferred basis similar to assets you acquire in various retirement saving plans.
Myth 4: Agents disclose their commissions openly
You think you know how much commission is being made by your agent? Well, life insurance is an industry that doesn’t fully disclose this information. These agents may charge 7% annual renewal commissions for the next decade which looks quite unattractive. Therefore it’s important to get quotes from TIAA-CREF as it will help you see policies without any commission.
Myth 5: Medical documentation is just a formality
Life insurers won’t show how important your health is to them and would make you believe that the medical exam is just a formality. Bigger policies require thorough examination from a certified doctor recommended by the insurer.
If you are a smoker, your chances of qualifying for Medicaid are less to impossible. However, don’t shy away from anything as if you try hiding something, it can potentially jeopardize your policy.
Myth 6: Work with multiple Insurers to Save Money
Working with many agents will place you at a disadvantage as you will have to interpret the various options laid before you instead of hiring an expert. Therefore it’s recommended that you work with a single broker that writes for multiple companies.