Buying life insurance may not be an easy decision to make. Planning for one’s own death is not a pleasant subject. However, it is a crucial step in protecting your loved ones and planning for your financial future. The better you understand it, the more informed your decision will be when you buy insurance. The following are five myths that are revealed about life insurance.
A parent living at home who does not earn any income does not need life insurance
If you are a caregiver staying at home and do not earn a salary, you may think you do not need a life insurance policy. This could not be further from the truth. The value of your services when it comes to caring for children or aging parents and running a household is considerable. Your partner would need to hire help or take time off work to replace these services. Life insurance can help cover these expenses should something happen to you.
Beneficiaries of a life insurance policy must pay income tax on the income
Life insurance benefits are generally not subject to income tax. Beneficiaries are not obliged to report the income on their tax returns. Even if your beneficiaries will not pay income tax on the death benefits they receive from your life insurance, interest paid on the income may be taxable.
You do not need life insurance when the children are adults
Life insurance can be an important asset at different stages of life. Once your children have reached adulthood and completed their education, a life insurance policy can still provide benefits. For example, it can alleviate the burden of paying for final expenses, property taxes or any remaining debts that you may leave behind. Life insurance also provides a way to leave your children a non-taxable inheritance that does not have to go through estate registration.
Employer-sponsored life insurance is all you need
Today, many employers offer group life insurance at little or no cost as part of a benefit package for employees. While this is an excellent benefit, employer-sponsored life insurance has its limitations. To begin with, the coverage is usually insufficient. Most employers in the United States offer a maximum of $ 250,000 in coverage. Another disadvantage is losing your life insurance coverage when you leave your job. If you stay with an employer for 10 years, the cost of life insurance can be significantly higher if you decide to buy an individual insurance after you quit.
If you are single and childless, you do not need life insurance
You may not be single forever and you may choose to start a family in the future. The best time to buy life insurance is in your 20s or 30s. You can save money in the long run if you buy insurance while you are young and healthy, and the premiums are lower. If you have a student loan or other debt, you may want to consider buying some coverage. A family member who has signed for you may be held legally liable in the event of your death.
Our agent can help you find the best rates on life insurance coverage that suits your needs.