Life Insurance Myths Get the Facts & Protect What Matters Most: Part 2
September is Life Insurance Awareness Month. We are writing simple posts to debunk some of the myths people may have about life insurance.
Check out part one of this three part series.
Myth 4: I have a life insurance policy through my job. If I take another job or lose my job, I can take the policy with me.
Fact: Typically, your group life insurance purchased through an employer isn’t portable – meaning if you leave your job, you probably cant take your insurance protection with you. However, if you own an individual life insurance policy, leaving your job will have no effect on your coverage.
Myth 5: My beneficiaries will have to pay income taxes on the proceeds from my life insurance policy.
Fact: Not true. The death benefits on a life insurance policy are generally income tax-free; yet very few people know this. Remember to maximize your life insurance benefits by properly designating your beneficiaries correctly. If the benefit is paid to your estate, the death benefit amount is added to your estate value which could cause you to pay estate tax.
Myth 6: If I travel out of the country and something happens to me, I am not covered.
Fact: If you pass away while in a foreign country, the policy would most likely pay out to the beneficiaries. However, some life insurance policies exclude certain countries, such as those currently on the U.S. Department of State’s Current Travel Warnings List; so it’s important to review your life insurance policy prior to leaving the country.
In our final part, well take a look at the last 3 myths of life insurance.