Myths About Life Insurance

admin — Thu, 24 Sep 2009 13:02:16 +0000

The majority of American households do have some variety of life insurance. But so few of us understand how to get the most out of it. Five of the most damaging myths that lead to costly life insurance mistakes… Myth 1: I just need enough life insurance to cover my family’s future expenses. Fact: If you really want to provide for your family’s well-being, you’ll need more than that. The good news is that this extra coverage won’t set you back as much as you might think. A typical family should combine the remaining portion of its mortgage … projected inflation-adjusted annual living expenses for the remainder of the spouse’s life … and college costs if they are a factor (assuming that costs will rise by 3% to 5% per year) to determine the amount the family needs to get by. Subtract the amount the surviving spouse will earn if he/she expects to return to the workforce at some point. Example: A 40-year-old man who’s in good health would pay about $875 a year for a simple 20-year level-term life insurance policy that provides $1 million in coverage, and this would be enough to cover all his family’s future expenses. And, for about $1,750, he could get a $2 million policy, enough to fully replace his lifetime earnings if his salary would have averaged $80,000 per year for the remaining 25 years of his career. An extra $875 per year (about $73 a month) is a small price to pay to ensure that his family won’t suffer financially after his death. To compare life insurance costs, contact your insurance professional.

Colorado Marine Officer » Common Myths About Life Insurance

Myths About Life Insurance