Colorado Marine Officer

Posts Tagged ‘Myths About Life Insurance’

Myth 4: My term-life policy can be converted to whole life, so I don’t have to worry about losing coverage if I ever become chronically ill. Fact: While it is true that more than two-thirds of term policies allow policyholders to convert over to whole life regardless of health problems, many “convertible” term policies can be converted only within a five or 10-year window – and insurance companies may not warn you when that window is about to close. If you don’t convert and the policy lapses, the insurance company gets to keep all the money you paid in premiums and won’t have to pay out a dime on the policy.
It is not uncommon for policyholders who have developed serious health problems to unwittingly miss their opportunity to convert to whole life and then find themselves uninsured and essentially uninsurable. Self-defence: Make a habit of reviewing your policy at least once a year so that you won’t miss your chance to convert – or any other deadline

Myth 3: My wife does not work, so she doesn’t need her own life insurance policy. Fact: Stay-at-home spouses might not produce income, but they often provide important services that are expensive to replace, such as cleaning, cooking and childcare. Some spouses also find that their own ability to earn is temporarily reduced after the loss of a partner. Example: A lawyer in private practice spent the year after his wife’s death walking around in a daze, causing his income to plummet. Couples with children should have at least $1 million in coverage for the nonworking spouse, more if the family is large or lives in an expensive area. You can consider decreasing that figure if the kids are in their teens and reducing it again once the kids are out of the house. A 40-year-old non-smoking woman in good health should be able to get a $1 million 20-year level-term policy for about $730 a year