Life insurance, as you might already know, is one of the best ways to protect your family’s future and cushion them from the financial agony they might face if you were to pass on or get incapacitated.
It could do so by replacing lost income, helping pay off outstanding debt as at the time of your demise, cover the beneficiaries’ education expenses, and even pay for the policyholder’s funeral expenses.
But even with these and other benefits in mind, many people are yet to fully understand how life insurance works. Just to help you get better acquainted with the policy, below are some common myths and facts associated with life insurance that you’ll appreciate knowing.
1. Myth: Your Employer Must Provide a Portable Life Insurance Plan
To begin with, employer-provided life insurance is not mandatory… at least not in countries such as the likes of the US. Many organizations choose to offer life insurance coverage to some of their employees as an added perk to attract and retain exceptional skills and talent.
And if an employer offers life insurance to an employee, they don’t have a legal requirement to make it portable or transferable, so to speak. Going by Policy Scout’s definition, life insurance portability refers to the ability to keep the policy by continuing to make payments after leaving a job, either individually or through your next employer.
Portable life insurance also grants you the right to get term life insurance without having to take a health exam or questionnaire.
2. Fact: Many Employers Offer to Provide Life insurance
While many people choose to get a life insurance policy from their own volition, some employers actually provide a considerable level of life insurance to their employees. Like everyone else, you’d want to protect your family as much as you can, which is why some employers provide life coverage to their staff sometimes even without their employee’s knowledge.
This would typically cover up to a year’s salary after your incapacitation, death, or another concrete reason that you’re no longer working for the company. The best part is that the employer won’t necessarily have to deduct these payments from your paycheck after paying your life coverage on your behalf.
3. Myth: Life Insurance Is Strictly Accessible After One’s Death
While most of the benefits of life insurance are enjoyable upon the policy holder’s death, that’s not the only way it can be useful to them. You can actually tap into the cash value of your life insurance policy by using it as collateral. This is especially true for whole life policies which earn a fixed interest over time.
4. Fact: Life Insurance Can Help You Achieve Long-Term Goals
If you carry permanent life insurance coverage, like universal or whole insurance, there are a few ways you could benefit while still alive. Besides the ability of using your life policy cash value as collateral for a loan, you can also withdraw money from your policy cash value and use it as you please.
Better yet, you can dedicate it to your long-term goals such as starting a business. Moreover, your life policy cash values can also be a great source of funds for your premium payments.
5. Myth: Life Insurance Is For the Old, Sick, and Wealthy
Anyone can secure life insurance in the modern world. It’s not restricted to the wealthy and well-to-do, neither is it meant for those with chronic ailments or health conditions that lower life expectancy or make your longevity uncertain. As a matter of fact, getting life insurance while younger and healthier comes with additional benefits.
6. Fact: Life Insurance Premiums Increase with Age
Insurance companies are in the business to make money, just like any other business. With other risk factors out of the way, they know that the risk of death increases as one grows older and wearier. To minimize their business risks, insurance policy providers ask more in annual or monthly premiums from older life coverage policy holders.
All in all, life insurance is an absolute necessity for anyone looking to leave their surviving kids and folk financially protected. As long as you’re well informed, it’s easy to make the most out of your policy, and in various ways.
About the Author/s
The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.
