Some of the largest purchases one will make in life involves buying a house, getting married, investing in a college education, and perhaps even buying an automobile. However, the most important purchase you will ever make is life insurance. You can debate all day long about whether it’s better to have term or whole life insurance, or to go with this company or that company, when in reality it’s important to simply not delay signing up for a policy. Below I will list out the 3 most common misconceptions when it comes to life insurance, and often cost people and their loves ones dearly.
Only Insure the Breadwinner
The breadwinner is a common term for the spouse in the household who works, or perhaps earns a majority of the household income. People often think that by simply replacing the income of the household breadwinner then they are adequately covered in case of an emergency. Many people don’t see the need to insure the stay-at-home parent, or the person who earns significantly less money. But if that person were to pass away, who would care for the children and maintain the home? This might lead to the need for hiring a nanny or housekeeper. Odds are that might not be in your current budget and could truly result in a financial hardship. You need to look at your total financial picture now, and what it would look like in the event of a death of either spouse.
I’m Adequately Insured
People tend to falsely believe they have “enough” insurance! I have found that many married couples think that if they replace their income until the child turns 18 years of age, then that will be enough. Think about all the unknowns though. Many parents continue to help their children well past the age of 18. Are you considering paying for college? Those costs only continue to rise year after year. Likewise, we see medical expenses on the rise year after year as well. The uncertainly with what the government will and won’t cover doesn’t help either. You need to make sure there is extra cushion for these expenses.
It Won’t Happen to Me
I know this one probably goes without saying, but I am going to say it anyways. The old adage “it won’t happen to me” can be costly and dangerous, and it’s not something you can do anything about if you are wrong. Bad things can and do happen to good people all the time. Don’t risk your family’s security and financial well-being just because discussing death is an uncomfortable topic.