THURSDAY, OCTOBER 10, 2013
Life insurance can sometimes be a tough product to grasp. Many questions arise when one is looking into covering their life. Do I need the coverage? How much do I need? What type is best for me? There are many misconceptions regarding life Insurance so therefore I decided to give you my top 6 myths so it may help to answer any questions that you could have regarding your own situation.
Myth #1: I'm Single and Don't Have Dependents, so I Don't Need Coverage
As you may have heard there are only 2 guarantees in life...death and taxes! So we should have at least enough insurance to cover that. Also with that any debt you may have and the possibility of a charity for which you may want to leave something behind to.
Myth #2: My Life Insurance Coverage Needs Only Be Twice My Annual Salary
It basically depends on the person’s situation however my rule of thumb is 10 yrs salary for the loss of income plus any debt that we are trying to cover. If we want to be more accurate there are many worksheets out there that will help us determine the adequate amount you require.
Myth #3: My Term Life Insurance Coverage at Work Is Sufficient
Most term policies through your employer will stretch to 5 times salary. As stated previously that may not be enough. Also insurance outside a group plan does tend to have better conversion options and can last numerous years longer than your group plan coverage will. Also consider factors such as layoffs, firings and the fact that your employer has control of the plan.
Myth #4: I Should ALWAYS Buy Term and Invest the Difference
This concept is still employed by some advisors out there. Things to consider here is how long do you need coverage for, because although coverage for term is cheaper when you are young it does go up substantially upon renewals. Sometimes considering tax sheltered participating whole life plans as well as Universal Life are better alternatives.
Myth #5: Only Breadwinners Need Life Insurance Coverage
Daycare costs!!! Enough said.
Myth #6: I'm Better Off Investing My Money Than Buying Life Insurance of Any Kind
Not a chance! It’s a huge gamble at the expense of your loved ones. Consider that you only require $250,000 of coverage. (10 years @ $25000 per year... very conservative annual income calculation) Not only is it hard to save that amount of money based on that income but what happens if you pass away in year 3 of your savings? Bottom line is the funds are definitely not going to be there.
 I designed this list to help you get a better understanding of some of the questions that I deal with on a day to day basis. It is meant as an instructional tool for you. At the end of the day it comes down to each person’s situation. What is important is that you sit down with a trusted licensed advisor to determine what works best for you and your loved ones.
Contact me, Russ MacDonald, at 800-667-7640 for Moose Jaw life insurance quote.
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