Myths About Life Insurance
More often than not, people have sparse information about insurance. It is, therefore, imperative to collect and understand all that is relevant and necessary about this important concept. You can do so by gathering the relevant information from authentic websites or by meeting an insurance expert.
As you may know, life insurance is a formal agreement made between an individual (or a group of people) called the policyholder and the insurer which is a company. The agreement lists clauses under which the specific company promises to pay a stipulated amount of money when the policyholder dies or the maturity period / duration of the policy ends.
Till the duration of the policy, the policyholder is bound to pay a predetermined amount to the company and this is called the premium. The premium needs to be paid at a fixed time — monthly, quarterly, six-monthly or yearly.
Here are some of the prevalent myths or wrong notions about life insurance coverage.
Myth 1: You should buy seven times your annual earnings. An average American is believed to have an insurance that is three times his or her annual income. Just imagine that you are earning $60,000 a year and you buy a policy with coverage three times higher, which is $180,000. If the policy stipulates 5% withdrawal every year, then your heir can take out $9,000 each year.
Myth 2: Agents don't give you the best deals. In this age of information explosion, internet provides details of all topics under the sun. It is boon to search information about life insurance on the net. But sometimes an insurance agent will provide you with the latest information and offer a better policy with less premium and more coverage. This is because some of the figures on the internet can confuse you. Only an expert agent can clarify all doubts in your mind.
Myth 3: All policies are the same but the charges differ. Insurance policy is a kind of formal contract between you and a company. Remember that the company lists all the unique features of its different policies. An insurance agent can tell you the advantages and disadvantages of all these policies. So remember that the premium is based on the benefits provided in the specific policies and hence variable.
Myth 4: If you have serious health problems, you cannot get insurance policy.
This is a false notion. A large number of companies have special features that are aimed at providing relief to the people suffering from disease(s) or ailment (s). The coverage under such policies is often expensive but you can go for it. Contact an expert in insurance and take a policy that provides you adequate coverage and benefits.
Myth 5: Life insurance is more important than any disability coverage
People worldwide believe that once they buy a life insurance policy from a reputed company, they can relax. It is not true. All policies floated by different companies have special features. These include clauses that provide you coverage for short or permanent disabilities. These kinds of policies are comparatively expensive and meant for people who travel a lot or are old and susceptible to diseases, ailments or accidents. .
It is imperative, therefore, to collect all reliable information from an insurance agent. Clarify your doubts and then go ahead with buying a policy that suits your needs.