Life insurance is a financial contract between an insurance policyholder and insurer. It can be considered as a secured financial plan. Proceeds from these policies can be used to pay final expenses, eliminate outstanding debts, and cover daily expenses. However, there’s a lot more to know before you choose life insurance online. In short, these life insurance myths and facts can give you a clear idea about life insurance purchases.
The following are the myths debunked about purchasing life insurance policies online.
Myth1: Buying Online Life Insurance Plans is Complex
The best thing about online life insurance policies is that it offers informed choices. When you choose a life insurance policy online, you can check comments and reviews. This is where you can get first-hand and genuine information. Not all policyholders are technically knowledgeable about finance. Thus, life insurance online platforms offer a live chat section to seek clarification for doubtful information.
Myth2: Life Insurance Online Policies should be Twice the Annual Salary of Policyholder
The amount required depends on individual policyholders according to their situations and preferences. Apart from the funeral and medical expenses, the debt should be paid. For this reason, cash-flow analysis determines the coverage that the insured individual should opt for.
Myth3: Variable Universal Plans are Superior to the Straight Ones
Multiple individual covers pay effective interest rates. But VUL or variable universal policies consist of many layers of payment related to insurance as well as security elements in the cover.
If variable sub-accounts within policies are unable to perform well, the policyholder gets a lower financial value. Unsatisfactory market performance generates considerable cash in variable policies. On the contrary, these variable policies need additional premiums to work effectively.
Myth 4: Life Insurance Online Policies are for Tax Saving Only
Many people invest in life insurance online plans because they think of it as a good option to save tax. On the contrary, the primary objective of life insurance online policy is to offer financial security or protection to the insured and his/her family. The point of tax saving is an additional benefit that comes along as cherry-on-the-cake.
Myth5: Life Insurance Isn’t About Investing Money
Unless you reach a breakeven position of asset accumulation, life insurance is required. When the individuals amass around 1 million dollars of liquid assets, they can consider either discontinuing or reducing the policy.
People who solely depend on investments in the early years of their lives take a massive chance, especially when they have dependents. The deceased individual who does not have coverage may leave nothing else for their family after depleting current assets.
Myth6: Other Investments are Better than Life Insurance
Comparing a life insurance policy with other investment options is definitely not the right decision. This is because both these options function differently. One needs to opt for a life insurance online policy to keep their family financially equipped if something happens to the policyholder.
These prevalent misconceptions about life insurance policies are responsible for the wrong purchase. The prime motto is to choose life insurance according to your budget so that sustainable assets are there to cover family expenses after your demise.