Few people enjoy buying life insurance. Doing so is akin to making a bet on how long they\’ll live. However, although many people find the subject unpleasant, it is worth discussing. A simple policy will ensure your family has the financial resources it needs to survive in the event you die.

There are a lot of misconceptions that continue to circulate about life insurance. Some involve the different products available. Others are related to the amount of coverage to buy. Still others address whether coverage is needed in the first place. We\’ll take a closer look at seven such issues below. If you\’re thinking about purchasing a life insurance policy, the following details will prove helpful.

\”Life insurance is unnecessary because I\’m young.\”

Young people need life insurance just like their older counterparts, even if they have fewer responsibilities. In the event a young person dies, he or she will likely leave behind a number of expenses that need to be paid. These might include the cost of burial, credit card bills, mortgage payments, and even medical bills if the individual spent time in the hospital. A life insurance policy\’s death benefit can take care of these and other expenses.

As an added benefit, premiums are usually low for young people in good health.

\”Guaranteed issue life insurance is better because of its cash value.\”

It is true that a guaranteed issue policy carries a cash value that builds with time. However, a sizable portion of the policyholder\’s premiums pays for this component. This is the reason premiums on guaranteed policies are so high.

A popular alternative is term life insurance. These policies do not carry a cash value, and as a result, are accompanied by lower premiums. Many people purchase such policies, and invest the money that would have otherwise gone into the cash component of a guaranteed issue policy.

\”Coverage is unnecessary because my spouse and I have no dependents.\”

With no dependents, your ongoing financial needs may indeed be relatively small. But if you or your spouse were to die, could the surviving spouse manage those needs on his or her own? Even if your mortgage has been paid off, the household\’s monthly expenses may still exceed your spouse\’s earnings.

The death benefit from a life insurance policy can help to meet these needs over the subsequent years.

\”I should buy enough to match twice my annual salary.\”

There are several \”formulas\” that people use to determine how much life insurance to buy. Such formulas are always flawed due to their simplicity. They cannot possibly take into account all of the factors that should be considered.

Think about the amount owed on various loans (mortgage, auto, etc.). Think about your credit card bills and other outstanding debts. If you have children, do you plan to pay for their college education? You\’ll also need to consider your current investments. Only by analyzing your family\’s specific needs can you accurately calculate a death benefit that can accommodate them. Simple formulas should be avoided.

\”Coverage is unnecessary because I have group life insurance at work.\”

The coverage offered by your employer may not be enough to meet your family\’s needs. The only way to know for certain is to analyze your cash flow in light of your expenses (described in the previous section). You may find that the money your family would receive in the event of your death is inadequate.

Another problem is that your group life insurance coverage will likely evaporate in the event you quit your job.

\”I\’m better off investing the money than buying coverage.\”

Over the long run, your investments (stocks, mutual funds, etc.) may grow larger than the death benefit provided by your life insurance policy. But if you invest your money instead of buying coverage, you\’ll lack the death benefit during the early years.

Moreover, relying on investments to meet the basic financial needs of your family is risky. Stocks move up and down, which means the value of your portfolio is not guaranteed.

\”Life insurance is expensive.\”

The premiums on a life insurance policy are influenced by several factors. The amount of coverage you choose will, of course, play a role. So too will your age and health. Also important is whether you buy a guaranteed issue and term life insurance policy. As noted earlier, term life insurance is far less expensive.

Avoid letting the above misconceptions about life insurance influence your decision to buy coverage. Determine how much your family needs, and compare premiums from several life insurance companies to ensure you find the lowest-priced policy.

Jeffrey Wells is a contributing writer for Kanetix, a website which compares prices on a wide range of financial products including insurance (Great life insurance rates!), mortgages and credit cards, with a wealth of information to help visitors purchase the best products for their needs in a highly secure environment. Fast, Friendly & Easy-to-Use.

Jeffrey Wells is a contributing writer for http://www.kanetix.ca – A website which compares prices on a range of financial products including insurance, mortgages and credit cards, with a wealth of information to help visitors purchase the best products for their needs in a highly secure environment

Author Bio: Jeffrey Wells is a contributing writer for Kanetix, a website which compares prices on a wide range of financial products including insurance (Great life insurance rates!), mortgages and credit cards, with a wealth of information to help visitors purchase the best products for their needs in a highly secure environment. Fast, Friendly & Easy-to-Use.

Category: Family Concerns
Keywords: compare life insurance rates, life insurance Canada