Life Insurance:Are You Covered?
The loss of a loved one can be an emotional roller-coaster, but it can also be a financial burden if the deceased is the sole income-provider and if soaring medical costs erase what savings he or she has. One way to ensure that your family or loved ones are covered and help them stay financially fit in the event of death is through a life insurance policy. Here are several mistakes people make when it comes to life insurance.
Depending on retirement savings to provide for a loved one
If you are the primary or higher wage earner in the household, your partner may be forced to liquidate or take large loans from the retirement account to pay for funeral expenses, medical bills and on-going daily expenses to sustain their existing lifestyle. This may put at risk the potential long-term financial security that would have benefited your family down the road.
Relying solely on an employer's policy
Many employers offer life insurance as a benefit at one or two times an employee's salary, but solely relying on this can be risky. For starters, this level of coverage may not be enough, even if you purchase additional insurance as part of the benefit. Also, the insurance often ends or is drastically reduced at retirement. If you need to purchase a policy on your own after retirement, the cost may be out of reach since premiums rise as you get older.
Believing you are too young and healthy for life insurance
Life insurance can actually make a lot of sense when you are young and healthy because premiums tend to be less expensive. Also the younger you are, the more likely you have more debt and fewer assets to pass on to heirs or to cover outstanding bills.
Thinking life insurance is too expensive
A 2014 study by Life Happens, a Life Insurance and Market Research Association, found the main reason why 63% of participants were not interested in life insurance: it was too expensive. However, when asked to estimate the cost of a premium, 80% of them overestimated the cost. There are several factors that go into a policy's premium - including the type of life insurance purchased. Before deciding life insurance is too expensive, talk to a professional.
Not seeking the advice of a professional
Understanding how a policy fits with your overall long-term plan is crucial. Every person's situation is unique and some may not need insurance at all. There are several different types of life insurance policies you can consider. Each has its own advantages and disadvantages. That's where the advice of an experienced individual can make the difference. If you are interested in reviewing your options, contact Erik Gotaas with Wealth Management* at LOC Financial Services at 248.474.2502 or learn more.
*Securities offered through LPL Financial, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. LOC Credit Union/LOC Financial Services are not affiliated with LPL Financial. Offerings are:
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