Here are the top five myths about term life insurance:
Myth #1: I don’t have money to spare for life insurance.
Fact: Prohibitive cost is among the most common life insurance myths preventing people from even seeking information. Term life insurance quotes, which can vary for periods from one to thirty years, are priced extremely low. In fact, the premium requirement for healthy people in their twenties and thirties can be lower than an evening’s entertainment cost per month. Talk to an advisor, the offered term life insurance quotes may surprise you.
Myth #2: My job provides me with a life insurance policy. I have no need for any further policies.
Fact: Organizations usually purchase group life insurance. This is not portable. This means that if you change your job, your coverage ends. In economically uncertain times, dependence on such coverage is inadequate. Also, since the cost of buying insurance increases with age, investing in an individual life insurance policy, whole life or term, makes sense, even if you do enjoy group coverage from your job.
Myth #3: It makes sense to ALWAYS buy term and invest the difference.
Fact: Though initially lower, the premium of term life coverage can become very high in later years. This means that the total premium for the more expensive whole life policy may be less than the ongoing premiums that could last for years longer if you choose a less expensive term policy. Also, the risk of non-insurability can loom if you have estate tax issues and need life insurance to pay for them.
Myth #4: The cost of my premiums will be tax deductible.
Fact: This is also another common life insurance myth. The cost of personal life insurance is not deductible unless you happen to be self-employed and the insurance coverage also insures the business. Then, the premiums on your term life insurance are deductible using the IRS Schedule C of the Form 1040.
Myth #5: A term life insurance policy can’t be converted to a permanent or whole life insurance policy.
Fact: Among common life insurance myths, this causes the most confusion. While obtaining term life insurance quotes, you can specify convertibility as a criterion. Some providers and policies do offer this option.
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