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- Many young people think they don’t need life insurance because they are healthy or don’t have children.
- But if you have debt – like private student loans – life insurance is necessary.
- It’s also important for stay-at-home parents and couples who share their finances.
After my husband and I got married last year, our financial to-do list began to grow rapidly. All of a sudden, we found ourselves struggling to make decisions about how to combine our money, what joint investments we should make, and what kind of future planning we should do now, even if we don’t. We’re only 34 and don’t have any kids.
It was then that the subject of life insurance entered the conversation. We found ourselves going back and forth to figure out if we needed it now or not and if paying it monthly would be a good use of our funds.
While we are still in the decision-making phase, I have started to learn about life insurance policies and all of the differing opinions that exist.
That’s why I decided to ask financial planners to bust the biggest life insurance myths that keep people from getting the coverage they need.
Myth: You don’t need life insurance if you’re young and healthy
One of the reasons my husband and I postponed life insurance immediately is that we are both young and healthy. But financial planner Andrew Rosen says that having this kind of mindset prevents you from planning appropriately.
This is why Rosen insists that people should remember that no one knows what their future looks like, because your health can change in an instant, and life insurance is also a way to start building your heritage now.
“There is a misconception that life insurance is only for death benefits, and many people don’t understand the cash value associated with some forms of life insurance,” Rosen says.
Even if you’re young and healthy now, Rosen continues to say it can be beneficial to sit down with a financial planner and discuss your options because he believes life insurance can help you achieve your financial goals.
Myth: Stay-at-home parents don’t need life insurance
Although my partner and I work full time now, it’s unclear how that might change once the kids come into play in the future. Which got us wondering if we both needed to get fonts now, in case one of us stopped working later.
Financial Advisor Jason Siperstein says that regardless of your employment status or whether or not you are the earner, life insurance is always important.
“Even if a stay-at-home parent dies, the cost of replacing child care or other household chores could be costly, even financially disastrous, if not planned for,” Siperstein says.
Myth: I’m single, I don’t need life insurance
When my husband and I talk to our friends, some of them object to life insurance just because they are currently single.
But financial planner Kevin Draeger says that even if you’re single, it’s important to think about life insurance, because if something happens, you could leave behind debts such as private student loans or car loans, mortgage or debt credit card that someone might be responsible for, such as parents or other family members.
“A life insurance policy can help you cover your final expenses and settle your outstanding debts,” says Draeger.
Myth: My employer’s life insurance policy is sufficient
As a freelancer, I don’t have access to a corporate life insurance policy, although some people do.
Draeger says that while employer-issued life insurance policies are generally a great benefit, they may not always be enough to protect your family in the event of your death.
“Many companies offer one to three times an employee’s base salary, but that may not be enough to pay for final expenses, unpaid debts, your mortgage, and lost future income for your family,” says Draeger.
There are more logistics that come with an employer policy than Draeger says to consider. For example, employer policies are not necessarily guaranteed. If a business is going through a tough financial time, the life insurance benefit could be discontinued.
Draeger also says that if you leave the company, you usually can’t take that benefit with you to your next job.
Myth: Life insurance is too expensive
After we got married, my husband and I wanted to limit our spending to achieve other financial goals. We considered life insurance as another major expense.
But Draeger advises to keep in mind that life insurance will never be as affordable as it is today.
“Rates are generally lower when you’re younger and healthier, so don’t wait to find a policy,” says Draeger. “Some types of life insurance offer living benefits in addition to a death benefit. These policies can provide cash value that can be borrowed, and the money in a life insurance policy will generally grow to tax shelter.”