Life Insurance Myths: Debunked!
April 26, 2024
Understanding the realities of life insurance can help you make informed decisions to protect yourself and your loved ones. Below, we debunk some of the common myths around life insurance.
- Myth: I have life insurance through my job, so I don’t need a separate policy.
Fact: Employer-provided life insurance policies are usually limited and may not be sufficient to cover all your needs. Having a personal policy ensures you have adequate coverage, even if you change jobs. - Myth: Life insurance is too expensive.
Fact: The cost of life insurance varies based on factors like age, health, and coverage amount. With various policy options available, it’s possible to find affordable coverage that fits your budget. - Myth: Single people without dependents don’t need life insurance.
Fact: Even if you’re single, life insurance can help cover funeral expenses and any debts you leave behind, easing the financial burden on your loved ones. - Myth: Term life insurance is always the best option.
Fact: While term life insurance is affordable and provides coverage for a specific period, permanent life insurance offers lifelong coverage and may include a cash value component. - Myth: My beneficiaries will have to pay income tax on the proceeds from my life insurance policy.
Fact: Proceeds received as a beneficiary aren’t generally counted toward gross income. However, any additional interest payments may be taxed. Keep in mind that this article is for informational purposes only. It’s not a replacement for real-life advice, so make sure to consult your insurance or tax professional for more information.
If you have questions or need guidance on choosing the right policy, consult with a CFS Financial Advisor.
Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder may also pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
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