Insurance is not as easy as it sounds. Just because you have a life insurance policy, it doesn't mean that your life is secured. In fact, a life insurance policy works the other way round since it provides financial protection to the survivors when the insured passes away. Thus, life insurance actually comes to be of use during the death or demise of the individual and not during his lifetime.
Several such notions exist amongst the insurance industry, which confuses the buyers, especially when they first step into the market to purchase their life coverage. If you're about to insure your life, you must try to find out the truth behind the myths that revolve in the insurance industry. Read along to know the common myths, so that you can avoid being misguided.
Common Life Insurance Myths
The following myths can be baffling. Unveil them to be aware about how life insurance coverage can be of assistance.- Myth – Only individuals with family needs to buy life insurance protection. Fact – This is not true. Single individuals may also need life insurance coverage. In case the insured individual dies, life insurance benefits can be used to pay off his debts and loans. Final expense insurance can cover the burial or funeral expenses for a single individual.
- Myth – Life insurance is expensive. Fact – The cost of life insurance varies from person to person and depends upon the life expectancy of an individual. A standard policy is usually affordable. Young people can buy life insurance protection at pretty cheap rates. However, individuals with pre-existing conditions may need to pay more for his or her life insurance coverage.
- Myth – Term life insurance offers the best coverage Fact – Term life insurance policies cover only for a specific time period. Though such coverage can be bought at cheaper rates than whole life policies, a term policy can turn expensive if you want to renew once the term is over. Moreover, term life policies don't offer the cash value advantage that comes along with a whole life policy.
- Myth – You can loan against life insurance policies Fact – You can loan against only those life insurance policies that offer the cash value advantage. Term life insurance policies don't accumulate cash value, and thus don't offer the advantage.
- Myth – Health doesn't affect life insurance policy Fact – An individual's health is of the primary concern to the life insurer. The insurers measure the health of an insurance applicant to determine his or her life expectancy. Accordingly, it is decided whether he'll be allowed or denied coverage. Good health ensures that you get the best coverage at affordable rates. The more health risks you have, the more you'll have to pay for your health care plan.
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