Are these life insurance myths preventing you from buying one?

If you’ve never purchased life insurance before, there’s probably a lot you don’t know about it. For example, you may think that it is impossible to get life insurance if you are over 50 years old. The fact is that while you may pay more for life insurance as an applicant in your 50s compared to someone younger, you are very likely to be able to get the coverage you want.

Another thing you may be mistaken about when it comes to life insurance is the cost. Many people believe that life insurance is generally an expensive product. It may actually be cheaper than you think, depending on the amount of coverage you purchase and the type of life insurance you choose.

Meanwhile, recent data from Assurance found that 30% of consumers are misinformed about how life insurance works when it comes to taxes. But it’s important information to have.

Don’t assume the IRS will come out after your loved one’s life insurance benefits.

Taxes apply to various forms of income. For example, if you withdraw from a Traditional IRA in retirement, you’ll pay taxes on that money. Likewise, if you receive dividends from your stock investments, you usually also have a tax liability.

However, you may be pleasantly surprised to learn that life insurance benefits are generally tax-free. And it might make you think differently about having a policy in place for your loved ones.

Assurance found that 30% of consumers believe life insurance benefits are taxable. And if that was your assumption, you might have stopped buying life insurance.

In the end, let’s say you leave $250,000 in insurance money to your loved ones. It’s easy to see why you wouldn’t want the IRS to swoop in and take 25% or 30% of that. However, life insurance payouts generally pass in full to the beneficiary and the IRS does not receive any portion of that income.

Life insurance may be cheaper than you think.

There are many factors that go into determining the cost of life insurance. These include:

• your age
• fig
• Amount of coverage purchased
• Type of insurance you purchase

The first two are factors beyond your control (well, you can take steps to improve your health to some extent, but if you have asthma, you can’t do anything about it). However, the last two elements are elements. within Your control. And if you’re worried about getting life insurance, you may want to look into term life insurance instead of whole life insurance.

Term life insurance provides coverage only for a specific period of time and the policy does not accumulate cash value. Whole life insurance gives you coverage while you live, and your policy builds cash value that you can ultimately utilize.

Term life insurance tends to be much more competitively priced than whole life insurance. So that alone can save you money.

Also, to keep costs down, don’t overbuy insurance. A good rule of thumb is to replace your income by about 10 times or more and cover any joint debt you have with loved ones. So, if you make $50,000 a year and have $150,000 in mortgage debt, $650,000 insurance may be enough. You’ll pay more for a $1 million policy.

Taken together, there is a significant amount of misinformation about life insurance in the context of costs, taxes, eligibility, etc. It’s a good idea to read up on how life insurance works so you can make an informed decision.

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