When it comes to life insurance, there are a lot of misconceptions out there. Understanding the importance of life insurance and getting a policy as soon as possible can help people ensure their loved ones are taken care of in the event of their passing.
Here are four common misconceptions about life insurance and some policies people in their 20s can consider:
1. People can be too young to get life insurance
Many people believe they don't need life insurance until they're older and have a family to support. Life insurance companies use age as an important determinant for the premium. Rates increase as a person ages due to a decrease in their life expectancy. But the younger someone is, the cheaper their life insurance policy will be. So, for those in their 20s thinking about getting life insurance, now may be the right time to do it. Individuals can obtain term life coverage from Fidelity Life as young as 18 years old.
2. People don't need life insurance if they're healthy
Healthy people often think they don't need life insurance because they're not at risk of dying soon. But the truth is, no one knows when their time will come, so it's important to have a life insurance policy in place just in case. And if someone doesn't have life insurance, their loved ones will be left with their debts and final expenses in the event of their passing. Life insurance will only get more expensive the longer it's put it off. Generally, when a person is younger and healthier, they pose less risk to an insurer, which is why they're offered the most affordable rates and may be able to obtain coverage without a medical exam.
3. Life insurance is too expensive
Another common misconception about life insurance is that it's too expensive. But many policies, like term life insurance and final expense insurance, can be very affordable. For example, a healthy female can pay as low as $15 a month for a 10-year term life insurance policy with a $250,000 death benefit. And if someone gets a policy in their 20s, they may be able to lock in a low rate for many years to come.
4. People don't need life insurance because they have other savings
Many people think they don't need life insurance because they have other savings, like a 401k or IRA. But life insurance is designed to replace the policyholder's income if they pass away, so those with a family should consider getting life insurance to ensure they're financially taken care of.
Life Insurance Policies for People in Their 20s
Here are some life insurance policies people in their 20s can consider:
- Term life insurance: This is the most basic and affordable type of life insurance. It provides coverage for a set period, typically 10, 20 or 30 years. If the policyholder dies while the policy is active, their beneficiaries will receive a death benefit.
- Whole life insurance: This type of life insurance provides coverage for the policyholder's entire life. It's more expensive than term life insurance, but it also builds cash value over time that the policyholder can borrow against or cash out.
- Universal life insurance: This type of life insurance is similar to whole life insurance, but it has more flexibility. The policyholder can adjust the premium payment or the death benefit amount.
- Final expense insurance: This type of life insurance is designed to cover the policyholder's final expenses, like funeral costs and medical bills. It's a smaller policy, but it can be a big help to a policyholder's loved ones after they're gone.
The bottom line
Those in their 20s thinking about getting life insurance shouldn't let these myths dissuade them. Consider getting a policy like a term life, whole life, universal life or final expense insurance. They may be able to lock in a low rate and rest assured that their loved ones are taken care of financially if something happens to them.
Fidelity Life offers term life policies and makes it easier for people to get them. First, an applicant provides information to help match them with a life insurance policy that meets their needs. The applicant can select the policy and then get a quote online or with the help of a licensed agent. Fidelity Life will then guide the applicant through the application and purchasing process.
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Original Source: Fidelity Life: 4 Biggest Misconceptions About Life Insurance and Why People Should Get It in Their 20s