Life insurance is not a simple product. Even term life policies have many elements that must be considered carefully in order to arrive at the proper type and amount of coverage. But the technical aspects of a life insurance policy are far less difficult for most people to deal with than trying to determine how much life insurance coverage they need in Akron Oh.

What you read will briefly take a look at the some of the most common myths surrounding life insurance and the truths that they distort.

First Myth: I’m single and have no kids, with that being said, I don’t need any life insurance. As a single person there is still the need of at least enough life insurance to cover the costs of personal debts, medical and funeral bills. If you are uninsured, you may leave a burden of unpaid expenses for your family or executor to deal with. Plus, this can be a good way for low-income singles to leave something to a favorite charity or other cause.

Second Myth: I only need an amount of life insurance coverage equal to twice the amount of my annual salary. That depends. You need an amount of life insurance equal to the amount that is needed based on your families needs. In addition to obvious bills and expenses, you may need to pay off larger debts such as the mortgage and provide an income for a number of years, in Akron Ohio. A cash flow analysis is usually helpful in order to determine the actual amount of insurance that must be bought - the days of simply computing life coverage based only on one’s income-earning ability is long gone.

Myth No.3: My term life insurance coverage at work is sufficient. Maybe it is or maybe it is not. For a single person of modest means, employer-paid or provided term coverage may well be enough. But if you have a spouse or other dependents, or know that you will need coverage upon your death to pay estate taxes or create an estate for charity, then additional coverage may be necessary if the term policy does not meet the needs of the policyholder.

Fourth Myth: I can deduct my premiums from my taxes in Akron Ohio. This is not true, in most cases. The personal life insurance premiums are never deductible unless the policyholder is self-employed and the coverage is used to insure his business. Then the premiums are deductible on the Schedule C of the Form 1040. With that said the death benefit could be taxed. So be careful.

Myth No.5: I absolutely MUST have life insurance at any cost. In many cases, this is probably true. However, persons with no debt or dependents and sizable assets may be better off self-insuring. If you have no debt and medical and funeral costs are covered, and then life insurance coverage may be optional.

Myth No.6: I should ALWAYS buy term and invest the difference. Not necessarily. The cost of term life coverage can become prohibitively high in later years; therefore, those who know for certain that they must be covered at death should consider permanent coverage. The total premium outlay for a more expensive permanent policy may be less than the ongoing premiums that could last for years longer with a less expensive term policy.

There is also the chance of being uninsurable, which could be disastrous for those who may have estate tax issues and is looking to use life insurance to pay them. To eliminate this risk with permanent coverage, it can be paid up after certain amount of premiums have been paid and then remains in force the rest of your life.

Myth No.7: Variable universal life policies are always superior to straight universal life policies. Many universal policies pay competitive interest rates, and variable universal life (VUL) policies contain several layers of fees relating to both the insurance and securities elements present in the policy. Therefore, if the variable sub accounts within the policy do not perform well; the variable policyholder may well see a lower cash value compared to a non variable universal life policy.

Sub par market performance can also generate substantial cash calls inside variable policies that require additional premiums due in order to keep the life insurance portion of the policy in force.

Eighth Myth: Variable universal life policies are always superior to straight universal life policies. Many universal policies pay competitive interest rates, and variable universal life (VUL) policies contain several layers of fees relating to both the insurance and securities elements present in the policy. Therefore, if the variable sub accounts within the policy under perform, then the variable policyholder may well see a lower cash value than someone owning a straight universal life policy.

Myth No.9: I should always purchase the return-of-premium (ROP) rider on any term policy. There are usually different levels of ROP riders available for policies that offer this feature. Many financial planners will tell you that this rider is not cost-effective and it should be avoided. Whether you include this rider or not, will depend on your risk tolerance and your other possible investment objectives.

A cash flow analysis will reveal whether you could come out ahead by investing the additional amount of the rider elsewhere versus including it in the policy. (Riders are available to provide additional benefits that help you customize your policy.)

Tenth Myth: I will be better off investing my money than buying life insurance of any kind. Complete nonsense. Until you reach the breakeven point of asset accumulation, you need life coverage of some sort, barring the exception discussed in fifth myth. Once you amass $1 million of liquid assets, you can consider whether to discontinue, or at least reduce, your million-dollar policy. But you take a big chance when you depend solely on your investments in the early years of your life, especially if you have dependents. If you die without coverage for them, there may be no other means to provide for them after the use of your saved assets.

In conclusion, these are just some of the more prevalent misunderstandings concerning life insurance that the public faces today. The key concept to understand is that you shouldn’t leave life insurance out of your budget unless you have enough assets to cover expenses after your death.