Who has the worst reputation: the car salesman or the life insurance salesman? It doesn’t really matter. Neither one gets a lot of respect.
When people think of a life insurance agent, they think of someone smarmy trying to sell them something they don’t really want to buy. But you know what? There are seedy insurance salesmen, car dealers, roofers, builders, doctors, teachers, and all sorts of people but they’re not the norm.
A good, trustworthy life insurance agent near your home in Grapevine, Fort Worth, or Dallas can have more impact on you and your family than any car salesman, that’s for certain. A stellar insurance agent is right up there with your family doctor, financial advisor, and fashion consultant. All help you make decisions that greatly impact the quality of your life and, in some cases, after life.
OK, forget the fashion consultant.
Like the notion of a smarmy life insurance salesman, here are some of the most common and dangerous myths about the often misunderstood insurance product:
Employer-provided Life Insurance is All You Need
Your employer may provide you with life insurance equal to one to two times your annual salary and you may be able to purchase up to four to six 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 five to eight times your income and many experts recommend 10 to 12 times. What you need is a great conversation to have with that not smarmy insurance agent you use in Grapevine, Fort Worth, or Dallas.
- Even if you 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 and working with your agent in Grapevine, Fort Worth, or Dallas, 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.
Even if you do have life insurance through an employer, you should be using an insurance company nearby your home or business in Grapevine, Fort Worth, or Dallas for other needs like homeowners insurance. If you have a good working relationship with your agent, spend time reviewing your employer-provided life insurance to make sure it meets your specific needs and, if not, develop a plan to possibly purchase additional coverage.
Only the Breadwinner Needs Life Insurance
It’s not always fun to play this game, but it does illustrate a point. Imagine if something were to happen to the stay-at-home spouse. Suddenly the breadwinner may need to hire someone to clean and take care of your kids — and that can cost a lot of money. Or you need to arrange for day care — and that can cost a lot of money.
Unless your family has that extra income to spare, you may need life insurance on both spouses. Insurance on a stay-at-home spouse also gives the working parent the opportunity to take time off work and help the family adjust to a loss.
Life insurance is Really Expensive.
The main reason given was cost, with 63 percent saying that it’s too expensive. However, 80 percent of them overestimated the cost. Twenty five percent thought that a $250,000 20-year term policy for a healthy 30-yr old would cost 1,000 a year or more when it actually would cost about $150.
If you’re working with an insurance company in Grapevine, Fort Worth, or Dallas that you trust, the agent will develop an affordable insurance strategy for you that meets your needs.
My Health Disqualifies Me from Life Insurance
There are a lot of companies that cover a range of health conditions and some even specialize in high-risk cases.
You can also purchase a policy that is not medically underwritten at all. Just be aware that they tend to be more expensive and have lower coverage limits.
Your health does not need to disqualify you from life insurance. On the reverse side of that coin, knowing how good health helps you lower your insurance premiums is important and isn’t always something that people think of. Talk with your agent in Grapevine, Fort Worth, or Dallas about healthy choices impacting your life insurance rates.
Everyone Should Buy Term and Invest the Difference
While this generally makes sense for most people, a permanent policy can be a better deal if you need life insurance for your entire life.
Some examples would be to provide for a special needs child or to cover estate taxes. For a small percentage of the population, the cash value can also be a good investment if you need life insurance, are in a high tax bracket and have maxed out all your other tax-advantaged options.
You Get a Better Deal Purchasing Life Insurance Online
The Internet can be a great place to research life insurance and find an agent but you actually pay the same price whether you purchase a policy online or through an actual flesh-and-blood agent.
What you don’t get online is the personal service that can help you figure out how much you need, which company is likely to give you the best price based on your health situation, and what the terms on the application mean. It’s hard to have a give-and-take conversation with a virtual insurance agent, or even one on the telephone. Insurance can be complicated and sitting across from an agent and having a conversation is valuable and doesn’t always have to cost “extra.”
Remember that a web site may not realize that you need coverage for your whole life due to a child with special needs or that your health won’t qualify you for the rates offered by the lowest price company. Most importantly, a commission-motivated agent can help motivate you to actually get the policy as it’s something very easy to procrastinate.
You’re Too Young to Worry About Life Insurance
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.
The biggest problem with procrastinating life insurance is that by the time you need it, it’s too late to get it.
Every person is unique. Some people don’t even need insurance. Whatever decision you make when it comes to life insurance, just be sure it’s an informed one.