American Life Insurance Myths. Page 2

Myth #3: All policies are the same, you are just charged more

You have to read your policy. It is a contract between you and an insurance company. It tells you what is payable and what isn't. All policies have different features. Make sure that you have received what you were told you were getting. Make sure that all names are correctly spelled and all numbers are right. Your written policy is what matters, not your phone conversations or your agent's promises.

Myth #4: You should always name your estate beneficiary

If you do, the proceeds will go through probate. This means that your policy proceeds could be tied up for several months to over a year. Your heirs will not have access to the money during this time.

The proceeds will also increase the value of your estate, which means your family might have to pay estate taxes. If you have an estate over $1.5, you will pay taxes depending on your state. Estate taxes are often as high as 48%, so do everything you can to avoid them.

Myth #5: If you are in poor health, you are uninsurable

This simply isn't true. There are a lot of companies out there that specialize in coverage to those who have or have recovered from a serious illness. The coverage is often expensive, but you can get it.

Being turned down once doesn't mean it will happen again. Shop around, one company might charge you an added surcharge, while another will charge you ( personal loans ) a standard to preferred rate. It really depends on the company, not just your health status.

Myth #6: Insurance agents know what you need

Many life insurance agents are looking out for your best interests, others aren't. That's the way it is. Agents are compensated differently for selling different products; that often influences what they sell you.

If you need help, also ask your CPA what type and how much life insurance you should buy.

Myth #7: Life insurance is more important than disability coverage

Most people recognize life insurance as an important part of their ( life insurance quotes ) financial planning. They often overlook the importance of disability insurance. You are 50% more likely to be disabled than you are to die when you are under the age of 50.

Most people will find that term life insurance best fits there needs and offers less expensive premiums. If you do, you also need to have disability insurance.