Buying life insurance that’s tailored to your needs can be an invaluable source of financial protection. Especially when it comes to protecting your loved ones during a challenging time. But how do you make sense of your life insurance needs when there are so many myths?
Here’s the truth behind some of the most common life insurance misunderstandings.
Myth 1: Your Group plan offers sufficient coverage.
Life insurance through your employer is a pleasant perk. But the coverage is limited. Most employers offer a base one time your salary and that is usually not enough. Second, you don’t own the group insurance, so if you leave your employer the insurance is gone as well.
Myth 2: Life insurance is expensive
There are two types of insurance, term and permanent. Term is “rented” and inexpensive. Permanent is lifetime coverage and can be used for retirement or estate planning. Permanent life insurance early is one of the best ways to lock in the most affordable pricing. If you’re on a budget, look at term insurance. If you are saving money and looking to accumulate assets tax free, pass funds through your estate tax efficiently or have an estate planning issue, look at permanent insurance.
Myth 3: You only need life insurance to cover funeral costs
When you get life insurance, you’re basically purchasing a tax-free death benefit for your family or beneficiaries. The death benefit is the amount of money that’s paid to your beneficiaries after you die. Sometimes, people see this money as a way of covering off the cost of their funeral. It can certainly do that. But you’ll also want to consider other financial needs your family may have to deal with when you’re gone. Ask yourself this: What expenses do they depend on you for right now? Could they cover those costs if you were to die? Your family may rely on you for various living expenses. For example, a mortgage or tuition,. The right life insurance plan can leave them with enough money to cover those expenses and any outstanding debts.
However, have you thought about what happens to your assets and how they are taxed when you pass away? This is one of the most important areas of planning and very rarely do people get it right.
Myth 4: You need the same amount of life insurance coverage as your partner
Your life insurance amount depends on your individual debts and income levels, unless you and your partner have the same income, you likely need different plans. A pair of personalized policies ensure both you and your partner have the right amount of insurance.
If you haven’t looked at your insurance in a while, feel free to reach out.
Elliott Levine is the President of Levine Financial Group in Toronto
We Save Physicians Money on their Insurance
416-222-1311 I info@levinefinancialgroup.com