Brown Insurance Group Blog

All You Ever Wanted to Know About Insurance


Life insurance is an important part of a well-rounded financial plan. But like all insurance, it can be confusing. Unfortunately, that confusion causes many people to skip the coverage altogether. Don’t let these myths put your family at risk for financial hardship.

MYTH #1: Your employer-provided life insurance is all you need.

FACT: Your employer may provide you with life insurance equal to 1-2 times your annual salary and you may even be able to purchase up to 4-6 times your salary. But there are several problems with that. First, your "salary" doesn't typically include commissions, bonuses, and second incomes. Second, to replace your income for dependents, you generally need at least 5-8 times your income and some experts even recommend 10-12 times. (You may want to use a calculator like this to determine your specific needs.)

Even if you do have enough insurance through your job, you may lose it when you leave. You may be able to convert your optional insurance to an individual policy or purchase one on your own but either way, it may be much more expensive than purchasing a policy today, especially if your health deteriorates.

Finally, you may actually be able to get a better deal on your own, especially if you're young and/or in above average health. Even if your employer's policy is initially cheaper, the cost may go up each year and you may not be able to take it with you when you leave, You can purchase an individual policy that locks in your rate for a period of time or allows you to build cash value if you want to keep the policy your whole life. Only include your employer's coverage in covering your needs if you can take it with you at affordable rates. Otherwise, consider it a bonus.

MYTH #2: Only people with kids need life insurance...OR...Only the breadwinner needs life insurance.

FACT: Chances are your spouse depends on your income, regardless of whether you have children. Could he or she afford to pay the mortgage and other household bills alone? A life insurance policy could help your partner keep the house and maintain the same standard of living.

Imagine if something were to happen to the stay-at-home spouse in your family. The breadwinner may need to hire someone to clean and take care of the kids and that can cost a lot of money. Unless your family would have that extra income to spare, you may need life insurance on both spouses. Insurance on the stay-at-home spouse also gives the working parent the opportunity to take time off work and help the family adjust to their loss.

MYTH #3: Life insurance is really expensive.

A recent study conducted by Life Happens and LIMRA, found that 25% of Americans said they need more life insurance but only 10% planned to purchase it within the next year. The main reason given was cost, with 63% saying that it's too expensive. However, 80% of them overestimated the cost. 25% thought that a $250k 20-year level term policy for a healthy 30-yr old would cost $1k a year or more when it actually would cost about $150. Consider the cost of a Latte at $4 per day or Life Insurance for only $1 per day. The cost to protect your loved ones is very inexpensive compared to your daily Latte.

MYTH #4: If you are single, you don't need it.

There are many reasons single people buy life insurance. For example, you may have children, be planning to marry or have aging parents who are financially dependent on you. Another unpleasant but important consideration: Your benefits can pay for your burial costs.

Life insurance would also help if you’re single and own a business or have major co-signed debt.

No one wants to think about dying or how it will affect your loved ones, but a policy could mean that no one else ends up encumbered with your debt.

Life insurance actually makes the most sense when you're young since the premiums are less expensive and you have fewer assets to pass on to heirs. The longer you wait, the more expensive it will tend to be and the more likely you are to develop a medical condition that makes it much more expensive. Of course, the biggest problem with procrastinating life insurance is that by the time you need it, it's too late to get it. Don't wait! Call us today at 219-972-6060 to protect your's less expensive than you think.