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Life insurance misconceptions you should know – CBS News

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By Matt Richardson
/ CBS News
If you’ve ever purchased a financial product or service then you already know how difficult it can be to separate fact from fiction and hyperbole from the truth. This is why doing your research prior to the point of purchase is so important. By looking into the pros and cons of a particular product, you’ll be able to determine its worth to you.
This is particularly important for life insurance, which comes in amounts ranging from tens of thousands of dollars to $1 million or more. To get the most out of a policy you need to know the ins and outs of the product first and that includes being able to determine what’s accurate and what’s not.
Fortunately, by doing your research and by speaking with life insurance providers, you can quickly determine what’s accurate and what’s misleading. If you’re in the market for life insurance then start by getting a free price quote so you know exactly what to expect.
Here are three popular misconceptions about life insurance you should know about.
While it’s generally true that if you outlive a term life insurance policy you won’t get your premiums returned, it doesn’t always have to be that way. In fact, if you secure a policy with a “return of premium” rider you can, in fact, have all of the payments you have made to the insurance company given back to you. This can be particularly attractive for younger policyholders who are currently in good health and have a history of longevity in their family. 
Just note that this feature is considered extra so it will alter the final price tag of the policy you ultimately secure. However, if you were hesitant to get a policy because you didn’t know what would happen if you outlived your term, don’t worry – with a rider you can get your money back.
Get a free price estimate now to see how much a term policy would cost you. 
At first glance, it’s understandable why many seniors think a life insurance policy may not be valuable. The cost to secure a policy, relative to the coverage amount provided, can be uneven. However, that doesn’t mean seniors shouldn’t buy life insurance at all. There are, in fact, many times when a life insurance policy for an older adult can be helpful to have – and it doesn’t need to break the bank, either.
Seniors who want to have funds to cover end-of-life expenses like a wake, funeral and more could benefit from obtaining a policy in an amount that covers those items. For other seniors, a policy may be valuable to use as an inheritance for loved ones or even as a cash alternative for relatives and friends to pay off the debt that otherwise would have been left outstanding.
Should every senior buy life insurance? Probably not. But for many older adults, a policy could prove to be effective. 
Life insurance policyholders often take a “set it and forget it” mentality when it comes to their policy. Simply pay the premiums and have peace of mind knowing that your loved ones will be provided for in the event of your death. And while this isn’t necessarily the wrong mindset to take, it’s an incomplete one. That’s because life insurance, depending on the type, can also potentially be used while alive.
Whole life insurance policies, in particular, last for the duration of the insured’s life – and they come with an attractive cash reserve that can be tapped into while they’re alive. Granted, it will take time to build up that account (and any money withdrawn will be deducted from any final payout). But still, it may be a better option than refinancing or taking out a personal loan. 
So if you think a life insurance policy will just be another bill without any tangible value while alive, you may be mistaken. A whole life insurance policy can be used by beneficiaries and by healthy, living policyholders, too.
Life insurance offers financial security for a wide range of adults. So don’t avoid a policy because you think you’ll be wasting your money (you can get your premiums returned with a rider). And don’t dismiss the benefits of a policy for older adults (who can use it to meet multiple financial goals). Finally, do your homework and look into all types of policies. While some types only benefit beneficiaries, a whole life insurance policy could be utilized while you’re still alive.
Get a free price quote now and learn more
First published on February 6, 2023 / 3:12 PM
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