Four Life Insurance Myths for the Young Family

A boy and a girl reading a book with a torch under the blanket
For young couples just getting started, the future can seem boundless. Yet, with new commitments, such as buying your first home or having children, comes the responsibility of making sure your loved ones will be provided for financially, no matter what life may bring.
When you die, life insurance can help your family maintain their standard of living and keep their plans on track.
With that in mind, it’s important to know the facts about life insurance. Don’t let the following misconceptions stop you from getting the coverage you need:


I only need life insurance if I’m the primary breadwinner.


Your family relies on your income regardless of whether you bring home the largest paycheck. Stay-at-home parents also should invest in life insurance because they perform valuable services, such as childcare, cooking, cleaning, and other household roles which would be extremely costly to hire outside help.


If I still need protection when the term policy ends, I can always renew the policy.


Term life insurance is popular among young families, as it typically offers the greatest coverage for the lowest cost. Term policies provide protection for a specific amount of time (the “term”), as well as for needs that will disappear over time, such as a mortgage or a child’s education.

However, many families realize that even after the kids are grown and the mortgage is paid off, their need for insurance continues – since they still need to provide income for a surviving spouse, eliminate debts, pay taxes, etc. Since premiums increase with age, renewing your policy when the term expires can be very expensive. Moreover, poor health may make renewal impossible.


I only need term life insurance.


Term life insurance makes sense for many young families, as their need for coverage is great and their budgets are often limited. However, that doesn’t mean that term life is the only type of insurance you should consider. Permanent insurance policies provide a death benefit as well as other unique features such as lifelong protection and the ability to accumulate cash values on a tax-deferred basis, like assets in most retirement-savings plans. You can access the cash values for important uses like a child’s education or a business opportunity.

*If these features appeal to you, it might be worthwhile to buy a large-face amount term policy, giving you the death benefit protection, you need, and combine it with a smaller permanent policy. When your budget permits, you can gradually increase your permanent insurance coverage.


I can get a better rate of return if I invest my money elsewhere.


While the most important reason for any life insurance purchase is to provide protection for your family, permanent insurance policies provide you with the ability to accumulate cash values that grow over time and can be borrowed against or withdrawn. (Withdrawing or borrowing funds from your policy will reduce its cash value and death benefit if not repaid.) And contrary to what many people believe, long-term rates of return on cash values are generally comparable to relatively low-risk investment products. Since understanding rates of return can be difficult, the best way to find the right solutions for your needs is to consult with an insurance professional.

Sproutt insurance advisors are available to help you determine what kind of life insurance is best for you. Simply answer a few questions and we will find the best-value plan for your lifestyle, needs, and budget.

Get an instant online quote for life insurance.