When you’re just starting out, it often seems that the dollar has never stretched far enough. And with new commitments, such as buying your first home or have a child, comes the responsibility to make sure your loved ones will be provided for financially, no matter what life may bring.
If you were to die suddenly, life insurance is there to ensure your loved ones can maintain their standard of living, stay in your home, send your kids to the same school and keep their plans for the future on the track. It also gives the bereaved spouse or partner time to make decisions, or in some cases find a job outside the home, without worrying about finances.
But common misconceptions often prevent young families from purchasing life insurance they need.
Myth 1: I only need life insurance if I’m the breadwinner in my family.
Do you bring home the biggest paycheck in your home or smaller, your family depends on your income to maintain quality of life, and it would have been missed if something happens to you. Even if you do not work outside the home, have a life insurance is a smart choice.
“Stay at home parents perform valuable services such as children, cooking, cleaning and household management, which can be costly to replace for a spouse or partner.“
Myth 2: If I buy a term life insurance policy and found that I still need protection when the term expires, I can always renew the policy.
Term policies are quite popular with many young families, and for good reason: They usually offer the greatest coverage for the lowest cost. term insurance provides protection for a certain period of time (the “term”), and can be ideal for people who feel they have a financial need to cover that will be lost from time to time, such as a mortgage or children’s education.
However, many families realize that even after the children have grown and the mortgage is paid off, their need for insurance continuously to provide an income for life partner, eliminate debt, pay taxes, etc. As life insurance premiums increase with age, to renew your policy when the term expires can be very expensive. In addition, poor health can make reform impossible.
Myth 3: I only need life insurance.
Life insurance makes sense for many young families because of their need for a large scope and their budgets are often limited. But that does not mean it’s the only kind of insurance that you should consider.
Permanent life insurance provides a death benefit as well as other unique features such as the protection of life and the ability to accumulate cash value is tax-deferred, similar to most of the assets in the pension-savings plan. You can access the cash value for essential purposes such as education or business opportunities. (Keep in mind, however, that withdrawal or borrow from your policy will reduce the cash value and death benefit if not repaid.)
And remember, insurance agents and advisors are there to help you. They can step you through your life insurance needs and solutions at no cost or obligation.