Many people don’t know much about wills and insurance. For example, we may assume we don’t make enough money to justify having an insurance policy to protect us from identity theft or finalizing a will. You may not have much, but chances are good you have enough to warrant an estate plan, which entails the right life insurance policy and the proper execution of a legally binding will.
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In a blogpost on Dave Ramsey’s site, Ramsey Solutions, the Ramsey team busted seven popular myths about wills and life insurance. Make sure not to fall for these — they could put your financial health at risk and endanger the economic lives of the people you hold dear.
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If You’re Young or Single, a Will Is Unnecessary
Which of the following two people needs an estate plan? The older man with a heart condition and a family of five relying on him or the 22-year-old healthy college grad who is single and has her whole life ahead of her? Trick question: the answer is both. There may be more urgency for the former to create one, but if the healthy college grad owns anything — be it money in a bank account in her name or a cat — she too needs a will.
“The truth is, any adult who owns stuff of any kind needs a will because tomorrow is not promised — and you don’t want the government deciding who gets your property,” the Ramsey Solutions team wrote. “Getting this done is one of the most loving things you can do for everyone you care about because it saves them legal hassle and gives them closure about where your stuff winds up.”
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Wills Are Expensive
Nothing is free, and that includes making a legally binding will. But you may think they’re a lot more expensive than they actually are. If you want to save money, do your will online instead of retaining a lawyer, who could charge hundreds an hour.
“We recommend working with our partners at Mama Bear Legal Forms to get your will done online,” the Ramsey Solutions team wrote. “Their wills are just as legit as any fancy attorney-made document. Their services will cover all will-related needs for 90% of people.”
Identity Theft Isn’t That Serious of a Threat
In 2024, the FTC reported receiving 2.6 million fraud reports in 2023. Of those who filed reports, more than 100,000 people said the theft cost them $10,000 or more. An increasingly common type of fraud is identity theft. If you think you’re exempt from risk, think again. The Ramsey team recommended being proactive and avoiding identity theft by purchasing protection against it.
“We recommend working with our friends at Zander [Insurance] for monitoring, alerts and recovery if anything happens to your personal information or identity,” the Ramsey Solutions team wrote.
Identity Theft Protection Is Expensive
Do you really want to invest in another type of insurance when you’re already paying for your home, auto and whatever else? Yes, you do — and identity theft protection isn’t prohibitively expensive.
“ID theft protection is one of the most affordable forms of protection we recommend for everyone,” the Ramsey Solutions team wrote. “Individual coverage averages anywhere from $10 to $40 per month. Family plans can range from $13 to $60 monthly.”
Homeowners Insurance Is Only Needed If You Don’t Have Enough in Your Savings To Rebuild
In the wake of the Los Angeles fires, we’re reading about thousands of homeowners who’ve lost their homes — and pretty much everything in them –without a hint of warning. Their tragic stories have highlighted the critical importance of having homeowners’ insurance.
The Ramsey Solutions team finds that some people think they don’t need it if they have enough in savings to rebuild. This thinking is all wrong. The Ramsey Solutions team cited the following reasons we all need homeowners’ insurance if we own a home:
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Homeowners insurance replaces not just the property, but the items in it.
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The cost to rebuild or repair a property after a disaster probably far exceeds what you have in the bank.
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If an injury happens on your property, you’ll need the liability protection homeowners policies provide. Plus, this will be handy if someone tries to sue you baselessly.
If You Get Life Insurance Through Work, You’re Set
It’s great when a company offers employees life insurance as part of its benefits. But don’t be tricked into thinking that this generosity will go as far as you’ll need it should you die, and your family lose your income.
“To be sure your family is protected if the unthinkable ever happens, you need enough term life coverage for a payout 10 to 12 times your annual income,” the Ramsey Solutions Team wrote.
You Can’t Afford Health Insurance
This one is a little controversial, given that healthcare in the U.S. is exceedingly expensive. However, the Ramsey Solutions team asserts that despite being costly, health insurance is not as expensive as dealing with specific medical events without coverage.
“Buying health insurance is still nowhere near as expensive as facing a mountain of hospital and medical bills without any coverage to help you pay them,” the Ramsey Solutions team wrote. “Unpaid medical bills are bankrupting millions of Americans.”
The argument here isn’t that healthcare is affordable; it’s that it’s cheaper than getting sick, injured or pregnant without it.
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This article originally appeared on GOBankingRates.com: Ramsey Solutions: Ignore These 7 Myths About Wills and Insurance
