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Life insurance is something you’ve probably heard a lot about. People say all sorts of things until it becomes a vague concept; the only thing you know for certain is that it’s something good to do for your family. But what’s true and what’s simply a myth? This article discusses 6 myths to help you determine fact from fiction when it comes to life insurance.

  1. You should purchase a plan worth seven times your annual earnings.

    The right policy amount differs for everyone. Although the average American buys a policy that’s three times his or her annual income, there is certainly no set rule on how much you should or should not buy. In the event of your death, your dependents are generally able to withdraw 5% from your policy each year without having to touch the principal. For instance, if you earn a salary of $60,000 and you purchase the average three times your annual income, your policy will be worth $180,000; the 5% your dependents can withdraw would equate to $9,000 each year. You may find that you want to purchase more than the average American to give your family some extra cushion so they can maintain their lifestyle. When planning the size of your policy, be sure to also consider the costs of childcare, education, and any emergencies that may arise.

  2. The only things that differs between policies is the price.

    All policies have features that are unique from company to company. The written contract contains information about what instances are payable. You should know what it says and understand what it will and will not do for you. A cheaper policy may not include the benefits of one that costs a little more. Make sure you buy a policy that best suits your needs.

  3. No one will insure people in poor health.

    Though it may be harder to find coverage if you suffer from a chronic illness, it is certainly not impossible. There are companies that specialize in this type of coverage. It’s likely that this type of policy will cost more for a person in poor health, but it can be acquired.

  4. You should always name your estate beneficiary.

    When an estate beneficiary is named, the payout must go through probate, which can tie up the money for several months. The proceeds can also increase the value of your estate, forcing your heirs to pay estate taxes that could be as high as 48%.

  5. Life Insurance is more important than disability coverage.

    Though life insurance is generally considered during financial planning, disability insurance is often overlooked. Did you know that, when under age 50, you are 50% more likely to become disabled than you are to die? A disability policy is good to keep in mind for added protection down the road.

  6. The internet can give you a better deal than an agent.

    True, you can probably find some bargain policies online. But if you don’t read the fine print, you may not be aware of the benefits you’re missing out on. An independent agent will do the shopping for you. Let them know what aspects of insurance are important to you and they will compare quotes and the quality of the providers offering those prices. Your agent will work for you to get you the best deal with the right amount of coverage for you.

Call us to get a San Francisco life insurance quote today!

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