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Life Insurance Barriers Just Might Lead

il-4Life insurance just might be the most misunderstood financial or insurance product on the market. The differences between the different types of policies are difficult to understand and there are a lot of myths about them.

Research can help save money and avoid being stuck with a life insurance policy that doesn’t meet your needs. Understanding the top myths and breaking down life insurance barriers just might lead you to the right fit when it comes to selecting a policy.

Myth #1- Term life insurance is always better than whole life insurance. Not true there are situations where whole insurance is a better deal. Generally if you plan to keep the policy until you die whole life insurance is a better deal because you can get some coverage without making payments. If you just need life insurance for a specific need such as financing your kids’ college or paying off your debts if you die then term life insurance can be a better deal.

Myth #2- The value of my life insurance policy should be about double my annual income. If you have kids or other dependents this is definitely not true. Your family will still have bills and other expenses long after your death. If you have kids you should have around $1 million in life Find the Right Life Insurance for the Right Price. Get a Rate Quote Now.
insurance or more. A big reason why you need that much is inflation, which destroys the value of money including life insurance.

Myth #3- The term life insurance I get through my work will meet my needs. Probably not true because most term policies don’t pay enough to cover estate taxes, pay off debts and leave money left over for needs like your kids’ college tuition. Another problem is that such coverage will usually end when you change jobs. Check the policy your employer provides to see how much you will need.

Myth #4- Life insurance is not subject to federal income tax. Life insurance is tax deferred not tax exempt, which means you will have to pay income tax on proceeds you take out of life insurance policies. Generally insurance premiums are only deductible as a business expense. Ask your tax advisor or consult the IRS before writing off life insurance premiums.

Myth #5- Whole Life Insurance is a good investment and source of retirement income. Not true. Whole Life Insurance was designed as a means of protecting assets from taxes and passing them onto your heirs not a source of retirement income. Taking money out of such policies or borrowing against them can be difficult and costly.

Myth #6- I should only buy life insurance through an insurance agent. Not true. Anyone can get a good deal on life insurance by shopping online. However, there are some companies that still only sell policies through agents, but they’ll come around as more and more insurance coverage sells directly online.