Sunday, September 18, 2011

Life Insurance Myths - Part 2

Myth 5: My beneficiaries will have to pay income taxes on the proceeds from my life insurance policy.

Fact: Your life insurance death benefits are generally income tax free.

Myth 6: If I travel out of the country and something happens to me, I won't be covered.

Fact: In the unlikely even that you pass away while out of the country, your policy would most likely pay out to your beneficiaries. Some policies may exclude certain countries, like those on the US Department of State's Travel Warnings List, so you should make sure you are knowledgeable about your policy's restrictions prior to traveling.

Myth 7: If I get a term policy, I can't convert it to a permanent or whole policy.

Fact: It is possible to convert a term policy into a permanent policy, depending on the specific policy. If you choose to do so, expect to see an increase in premium. You may also find that you have certain limitations or the new policy will require renewals. 

Myth 8: I don't need life insurance once my children are grown up.

Fact: Like insurance can help you achieve your goal of leaving an inheritance to your children and loved ones. An insurance policy can also help to alleviate the burden of final costs such as funeral arrangements or medical bills. 

Myth 9: I have a comfortable savings, so I don't need life insurance.

Fact: It is very easy to underestimate the amount of savings you'll need in the event of death. Most Americans do not have enough in their savings accounts to cover the expenses of that event. If you don't have enough saved and you don't have a life insurance policy, you may leave the burden of expenses on your loved ones.

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Source: AllState

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