Insurance coverage, and the terms within the policies, can be confusing. When it comes to insurance for females, there are a number of myths that have been created. Here are six life insurance myths that women, in particular, should know about.
- "The cost of my premiums will be tax deductible." In most cases, your premium is not tax deductible. An exception to this is if you are self-employed and run your own business. If your life insurance policy was taken out in order to protect you, as the business owner, then the premiums may be deductible from your taxes through a Schedule C form.
- "I'm single and have no children. I don't need life insurance." Whether you have dependents or not, life insurance is still important to have as it can help to cover the cost of personal debts. Life insurance will also cover the cost of funeral bills, medical bills, and much more. When your time comes, your loved ones left to cover any debts will have life insurance that can help protect them from this financial burden.
- "My life insurance only needs to be twice my annual salary." While this may be good rule of thumb, it isn't always the case. The amount of life insurance each person needs is different and depends on many things. You may want to consider the amount of medical and funeral bills that will need to be paid after you die. You must then think about other debts you will be leaving behind, such as your mortgage or car payments. These debts might leave your loved ones with the burden of paying these costs for many years after you pass. Life insurance can help them with these payments.
- "My work life insurance is enough." If you are single, your work life insurance may be enough. If you have multiple dependents, you should consider getting more life insurance. If at any time you do decide to change your job, you may not be able to take that coverage with you, which is another great reason to consider getting more life insurance.
- "The head of the household needs a life insurance policy but no one else does." If you make the most money in your household you should definitely consider purchasing a life insurance policy. The loss of your paycheck will make it difficult for your loved ones to recover financially as any outstanding debts might leave them with the burden of paying for these costs for many years after your passing or, worse, land them in poverty. However, if your partner is working or a stay-at-home parent, they should also be insured to cover the loss of their income or to cover the cost of any services that the stay-at-home partner provides if they should pass. Life insurance can help your family continue the lifestyle that you have established.
- “I should invest my money instead of getting life insurance”. One of the great advantages for most families is that life insurance benefits are not typically taxed, however, it is always best to seek the advice of a tax advisor to assess your individual situation. Moreover, when you buy a term policy, all of your premium payments go towards your loved ones. This helps to ensure that they will be covered in the event something should happen to you and you’re not there to provide for them.