The information on this website is provided with the understanding that neither the Loyall Group, nor the authors of content provided or otherwise accessed on this website are engaged in rendering actionable financial, legal, accounting, tax, medical, veterinarian, or other professional advice and services. The information and guidance provided here should not be used as a substitute for consultation with professional financial, accounting, tax, legal, medical, veterinarian, or other competent professionals. Before making any decision or taking any action, you should consult a qualified professional. A more comprehensive recitation of our policies in this regard can be accessed here
We’ve all been there. Trying to find answers about what kind of life insurance to get, or whether you need it as a veterinarian or orthodontist. Talking with your friends, you may get many opinions about what to do. One friend is planning to pay for his kids’ college educations with his life insurance policy. Another who is single has a life insurance policy as part of her retirement strategy. Your co-worker says the group policy is good enough for him, but you aren’t so sure.
Let’s sort some fact from fiction here today. Keep reading to find out about the top ten myths about life insurance.
Know you need life insurance, but feel chaotic sorting through your options? Reach out to Loyall Group for a free and easy consultation. We transform insurance from chaos to clarity, so you can focus on what matters.
1. I Don’t Need to Review My Coverage
Life insurance is designed to protect your loved one’s financially in the case of your premature death. If you have dependents and are still earning, your family will need a secure policy if you die. Generally, life insurance policy coverage is designed to pay for death expenses, living expenses for the remaining family members for a time, and large expenses that could be burdens, such as student loan debt or a house mortgage.
Anytime you make a major life change, you should review your coverage to ensure that it is still enough for your family members. Some life changes, such as welcoming more children into your family, marriage, divorce, and remarriage will require you to make changes to your beneficiaries as well as your coverage amounts.
You will also want to look into your life insurance coverage when other life changes happen. Adding new debt, moving houses, getting a raise, or buying a practice as a veterinarian or orthodontist, can mean the time to add more coverage. If you’ve had a big change in your health, like quitting smoking or vaping, you may qualify for a discount on life insurance and will want to review your coverage.
When you review your life insurance with an experienced insurance professional, you’ll have the opportunity to go over other insurances and make sure they are working together to keep you protected. If you’ve recently had a major life change, contact us at the Loyall Group to see if your life insurance is up to par.
2. My Beneficiaries Will Have to Pay Taxes on the Payout
While many policyholders understand how life insurance works, they may not be as clear on how their beneficiaries will get the benefit if death occurs. Understanding the claims process of your life insurance company is important to review with your insurance professional. Having clarity about the process will answer another important question: will your beneficiaries have to pay taxes on the money received?
The answer in most cases is no. Usually the payout on a death benefit is not taxed. However, as Business Insider writes about, there are some exceptions to this rule. If the death benefit includes a cash value amount, the cash value portion will be taxed. And, if you’ve written off your life insurance premiums on your taxes, you’ll be taxed on the death benefit received.
3. I’m a Stay at Home Parent, so I Don’t Need a Life Insurance Policy.
When you know your value as a stay-at-home parent, you know your family would need a life insurance policy to cover the financial gap if you had a premature death. Stay-at-home parents provide many services in the home that would cost money if they weren’t there.
Child-care costs for the surviving parent are the main reason to get a policy on a stay-at-home parent. But other reasons may include funeral expenses, inheritance planning for children, medical bills, mortgage payoffs, and even locking in a low rate while you are young and healthy.
4. I Have So Much Retirement and Savings, I Don’t Need Life Insurance
If you have enough investments and savings to dismiss the need for a term life insurance policy, you may still need a whole life policy. If you’ve maxed out other retirement options like your 401K or Roth IRA plans, a whole life policy could be a vehicle for more investments through its cash value portion. You will need a highly experienced advisor who understands how to make one of these policies maximize your retirement impact. And, as with all strategies, be sure to continue researching and learning to see if this is the right path for you.
5. I can use a Waiver of Premium Rider in my Whole Life Insurance to Protect my Retirement from Disability
If you have a waiver of premium rider on your whole life policy, you may think your money is totally protected during a disability. However, it’s important to define some terms when considering this issue. The best way to protect your income (and keep saving for retirement) is through a disability policy.
When you have a waiver of premium rider, if you become disabled your insurance company will waive the premium during the length of your disability. You can still keep your life insurance, even if you are out of the workforce.
But, whole life insurance has a restrictive definition of “disability”. It may not pay under certain circumstances. You should look into your policy to learn what it’s definition of disability is. Excellent disability insurance policies have the core coverage of “own-occupation” definition.
A true own-occupation definition means that your disability policy will pay if you become disabled and can’t perform the functions of your occupation or specialty, even if you become employed in a different occupation or specialty. For specialists such as veterinary surgeons or orthodontists, this type of language is essential in a policy.
While a waiver-of-premium rider in your whole life policy is good protection for your life insurance. In order to protect your income during a disability, you need disability insurance.
Counting on a rider in your whole life insurance policy for disability is not enough protection. Contact Loyall Group for an easy and free quote today on a disability policy that protects you and your loved ones.
6. I Can Always Easily Get a Life Insurance Policy Online
It’s not always in your best interest to jump online and get any policy. Working with a professional who understands you as a person, your financial goals and life dreams, is important when obtaining life insurance. As a veterinary or orthodontic specialist, you understand the need for an expert to handle important details in life.
If you get a one-size-fits-all policy online, you may miss out on a seasoned professional’s guidance through the underwriting process. At Loyall Group, you can start online with an easy consultation form, then move forward to receive personalized service in person or on the phone. We work with the best carriers to ensure you get accurate and fair quotes with the best prices. And, in the future, you’ll have a person you know and trust to talk to if you need to review your policy. All of those features won’t come with a blanket life insurance policy from an online company.
7. Once my children grow up, I won’t need life insurance anymore.
Depending on your financial situation, you may still need life insurance to fully provide for a spouse or family member in the case of your death. Some of the most common reasons, according to the Insurance Information Institute to keep your life insurance policy once you have an empty nest include:
- If your retirement savings are not enough to support your family’s current earnings, including a two-income family.
- If you don’t have sufficient emergency fund savings or social security earnings to support your spouse.
- If you have adult children who are disabled and require care for the rest of their lives.
Because the variables are dependent on your specific earnings and savings plans, as well as you and your families’ lifestyle needs, it is best to chat with an advisor about how to bridge gaps with life insurance.
8. I can’t afford life insurance.
According to the Life Happens 2018 Barometer Study, 90% of their study participants believed that the primary breadwinner needed to have a life insurance policy. Yet, “44% of Millennials overestimate the cost of life insurance by five times the actual amount” (Life Happens). That is almost half of Millennials thinking that they can’t afford life insurance.
But life insurance doesn’t have to be expensive. Based on underwriting and your personal health, Millennials can expect to pay between $20-$40 per month for a 20 year, $500,000 benefit term life policy, according to PolicyGenius. The best way to find out about the affordability of life insurance is to contact Loyall Group for a free and easy quote.
9. I’m Too Young to Buy Life Insurance
You may need life insurance for a number of reasons while you are young and/or single. If you have student loans with a co-signer, you will want to consider protecting your loved ones from the burden of debt in case of your premature death.
Additionally, term life insurance companies insure young and healthy individuals at a lower premium. You are a low risk individual and your premiums could be locked in at an affordable rate. According to Policygenius, rates generally go up 4-9.5% each year you delay getting life insurance. So, while you are young is the perfect time to start thinking about life insurance.
10. My Life Insurance Through My Employer is Good Enough
While group insurance is a great way to supplement your own insurance policies, relying on it has some pitfalls.
Whether you are on a group disability policy or life policy, you may not be getting adequate coverage for your specific family. Typically, coverage through your workplace will be a lower amount than you may need.
You can’t take your group insurance with you. Locking in rates with your own policy, and then having the flexibility to continue that policy if you leave a practice means you get to keep your rates. You won’t have to go through underwriting again.
Now that you know some of the truth about life insurance, make your plan to protect your loved ones wisely.
Ready to start exploring your options in life insurance? Connect with our experienced team to get a fast and easy quote. Start protecting your loved ones today.