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Fact Check: The Top 9 Myths About Life InsuranceLife insurance is easily one of the most popular and desirable liability policies on the market but, as with any popular financial product, it’s plagued by a number of myths and misconceptions. These myths can actually end up costing consumers a significant amount of money if they don’t take the time to dispel them, so it’s a good idea to do a fair amount of research before settling on a given life insurance product, or choosing whether to buy life insurance at all. Of all the common misconceptions about life insurance, nine of them are particularly costly and wrong, but easily explained.

1. A Life Insurance Policy Should Be Twice an Annual Salary

Most consumers shop for life insurance products with the belief that their policy should only cover expenses that amount to twice their annual salary. While this is a good starting point, and it may work for some buyers, it’s not a universal rule and it may lead to a significant underinsurance problem after the insured has passed away. Remember that the insurance policy must cover all financial obligations, funeral expenses, and other miscellaneous expenses that may be encountered by family members and the executor. This often requires a larger policy.

2. Single People Don’t Really Need Life Insurance Coverage

A large number of single individuals are convinced that they don’t need life insurance coverage, as they have no dependents or spouse to support in the event of their death. Single people, though, have financial obligations just like everyone else. They will also cost surviving family members or an executor a significant sum of money in burial costs and funeral expenses. While a very large policy may not be required, a life insurance product is still the best way to eliminate or offset these expenses for single people.

3. An Employer-Subsidized Term Life is Sufficient

For those making lower incomes, with relatively few financial obligations and potentially no spouse or dependents, this myth might be true. The problem, however, is that it takes a very limited and rare set of circumstances for that to be the case. Even single, lower-income individuals must often supplement their employer’s term life coverage with a more robust, financially beneficial liability product.

4. Life Insurance is Only Needed by the Head of Household

Everyone dies. It may sound morbid and pessimistic, but it’s the truth. Another thing that is almost universally true is that everyone who dies will have expenses, debts, and other obligations that are best dealt with by a life insurance policy. While the head of household may require a more substantial life insurance policy than others, the truth is that everyone in the home should buy or be covered by a life insurance product that will reimburse funeral expenses, unpaid debts, and other costs.

5. Investments are a Better Option for my Heirs than a Life Insurance Policy

In a fraction of one percent of cases, this myth could plausibly be true. For it to be true, however, the amount of any investments held would have to at least break even with assets, debts, financial obligations, and eventual funeral costs. That’s a significant sum of money, and it’s largely impractical. Investing is a good way to build a nest egg, but insurance is the single best way to ensure that future generations can enjoy that nest egg in the form of an inheritance, rather than an expense account for funeral costs and other obligations.

6. Life Insurance is a Burdensome Financial Obligation

There seems to be a perception among some consumers that life insurance represents a significant additional cost, perhaps because of the large amount of coverage offered by these policies. Due to the long-term nature of life insurance policies, though, this is actually not true. Life insurance is often one of the cheapest liability products available, with some of the highest coverage levels and payouts in the industry. Some policies even cost less than $20 per month, making them easily affordable even for low-income earners.

7. Bad Health Will Make Life Insurance Impossible to Obtain

This is not true, though many life insurance companies will charge slightly higher premiums to compensate for the added risk of insuring someone in less-than-idea health. Even so, these policies remain highly affordable and they are no more difficult to get than the policies offered to very young, very healthy people. All it takes is a skilled agent, an honest approach, and persistence.

8. Life Insurance Premiums are Deductible

This is only true for business owners and those who are self-employed, as their life insurance coverage premiums can be deducted from tax returns if they’re used to insure a business. For all others, though, this is simply not true. Life insurance premiums are not currently deductible as part of any federal or state tax relief program, and that isn’t likely to change in the very near future. Be sure not to rely on the hope of this deduction when incurring the monthly cost of a life insurance product.

9. Young People Don’t Need Life Insurance Policies

A person’s age does not generally determine when they die. It’s a good indicator of a person’s potential longevity, but it’s not a certain calculation. The truth is that people can die at any time, and their financial obligations will need to be met whether they’re 25 or 95. Young people in a stable profession with the means to purchase life insurance should do so as soon as possible.

With a Better Understanding, Life Insurance Makes More Sense

Dispelling the nine most common myths about life insurance is a good way to show who benefits most from coverage. Those who have significant financial obligations, dependents, or even those who are single, should waste no time in finding a robust, affordable policy that works for them both in the near-term and for the longer-term future.