There are several myths surrounding life insurance; perceptions that tend to color the way people look at them, often leading to wrong investment decisions. Most of these myths are born out of ignorance or reluctance to understand what life insurance is. Here are six such myths that need to be debunked.
Myth #1: I do not work so I don't need life insurance: Life insurance is not about pay checks; it is about making sure that your contribution to the family is not missed when you are not there. You may be the care giving parent, looking after children, keeping the house etc. If you are not there someone will have to do the job and chances are that someone will have to be paid. So whether you have a visiting card or not, you certainly should have an insurance.
Myth #2: I'm too young to have a life insurance: Buying insurance is about not taking chances. So while odds are that you may die of old age, the basic idea behind insurance is to cater to the remote possibility of it being otherwise. And one is never too young to die. In fact term policies are very good options for youngsters who do not want to spend too much money on an improbable event, yet want to minimize risks. Myth #3: It's too cheap, so there must be a catch: A basic term policy is the simplest form of investment. You pay to be protected. When you stop paying the protection also ends. You buy term insurance for the duration you need some sort of back up. It could be till you are debt free or till your kids clear college. You need to decide on the period and start paying the premium. The premiums are fixed for the length of the term and do not increase even if the status of your health changes.
Myth #4: Once my kids are independent and my mortgage is paid off, I do not need insurance: There will never be a period of time when you will not be missed. Let's say your spouse outlives you by several years, how will inflation be met? Leaving behind something for our spouse can only be beneficial.
Myth #5: My job gives me life insurance. I do not need a separate policy: Very often jobs do not give you and your family the cover you want. You need to review your employer-paid policy carefully and see if it will keep your family comfortable and happy when you are not around. If it does not, you have your answer.
Myth #6: Getting insurance is cumbersome: Not anymore. Thanks to the Internet, you can get insured in less than a quarter of an hour. Right from getting quotes to getting underwritten, everything can be done in one login session.
Get beyond the myths to the basics of insurance. Chances are you will realize you need one.