Top 10 life insurance myths

Top 10 life insurance myths


True or false? Fact or fiction? Understanding term life insurance and its benefits means sifting through the myths surrounding it. So we've taken a look at the most common misconceptions about life insurance to set the record straight, helping you to make the right choice for you and your family.
Myth #1: I don't need life insurance
Probably false. Unless you are an individual who does not have children, has money on hand to cover all debts and funeral expenses, and does not feel the need to offset the loss of their income to a spouse, leave any additional money to family, or to a charity, then it may be true, you don't need life insurance. But few people have the funds readily available to fulfill all their wishes or meet their obligations after their death.
At the very minimum, if you have anyone who relies on your income for their day-to-day needs like a spouse or children, or if you have debts like a mortgage, credit cards, or car loans, then you likely need life insurance.
Myth #2: I don't work outside the home so I don't need life insurance
Definitely false! Just because there's no paycheque to replace, doesn't mean life insurance is unnecessary. In fact, have you ever considered how much it would cost to pay for childcare and housekeeping in the absence of a stay-at-home parent? It's a lot of money and reason enough to have life insurance.
Myth #3: I have life insurance through my job. I don't need any more coverage
False. The truth is your life insurance coverage through your work may not be protecting yourself and your loved ones as much as you think. Review how much your employer-paid insurance provides and calculate whether this is enough to keep your family comfortable through the difficult times if you're not around. What's more, when you leave your job for any reason, including retirement, your coverage will cease.
Myth #4: I have coverage from my mortgage lender. It's enough
Mortgage life insurance pays off your mortgage if one of the people listed on the loan dies before it's paid—but that's it. What about the rest? Term life insurance offers coverage that can be used for anything, including funeral expenses, paying down a mortgage, car loan and credit cards, or to offset the loss of income into the family finances.
Myth #5: I don't need life insurance once my children are self-supporting and my mortgage is paid off
Everybody's insurance needs vary. But how would your spouse manage daily living expenses without your help? And what if your spouse outlived you by 10, even 20 years?
Myth #6: I won't be able to get insurance because I'm a smoker
Not true. What is true is that as a smoker, the premium you pay for your life insurance coverage will be slightly higher than a non-smoker's premium. Even though as a smoker you'll pay more for your coverage, it's likely more affordable than you think.
Plus, many life insurers offer ‘preferred rates' to smokers as well. After all, even though you are a smoker doesn't mean you are unhealthy, so why not?
Myth #7: Once a smoker, always a smoker in the eyes of the life insurers
Wrong! Good news for ex-smokers. Most life insurance companies consider you a non-smoker once you've been smoke-free for 1 full year. So congratulations, after one year you can get non-smoker rates.
Myth #8: I'm young so odds are I won't need life insurance
Although it is unlikely you'll die during your working years, you're not insuring for what's likely to happen but instead, for the worst-case scenario. That's why term life insurance is inexpensive for young, healthy people. Buying life insurance now means you'll be providing financial security without spending a lot of money for it.
For example, an online quote at kanetix for a $250,000 10-year term policy for:
a healthy 35-year old non-smoking woman costs as little as $173 a year*
a healthy 35-year old non-smoking man costs as little as $215 a year*
a healthy 35-year old non-smoking married couple costs as little as $313 a year*
What's more you may even be eligible for 'preferred' rates that mean the annual premiums are even less!
Myth #9: If term life insurance is really so cheap there must be a catch
There's no catch. Your basic term life insurance policy will offer you coverage so long as you pay your premium. You buy term insurance for the duration of time you'll need life insurance, whether that's until the kids are out of school or until your mortgage is paid off. Plus, your premiums are fixed for the length of the term. They won't increase even if the status of your health changes.
Myth #10: It's such a hassle to get life insurance
Thanks to the Internet, getting quotes is fast, free and easy. Online quotes for term life insurance are available online at kanetix from some of Canada's most respected and known insurance companies.
Final fact:
Life insurance policies provide you with customized coverage for your family's needs. Complete a quote online at kanetix for a Term 10, Term 20 or Term to 100 life insurance policy and we'll introduce you to a licensed representative so you can go over your family's life insurance needs.
* Rates from the kanetix website May, 2007.
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