The 13 Myths About Life Insurance [infographic]

Life insurance it’s too expensive, I don’t really need it or I have it through work…. These are just some of the most common myths about life insurance. There are many misconceptions when it comes to buying life insurance. In this post, we will cover the top 13 myths that we’ve encountered throughout the years and debunk them.
Life insurance has been around for more than 250 years, in the US that is. Without a doubt, it has changed and evolved a lot since then. However, it still remains a taboo subject for many and therefore there are many misconceptions.

Below are the 13 most common myths about life insurance:

1. Don’t need it

This is probably the most common one. The truth of the matter is, you will die and if you are like most of us, you need life insurance. Yes, it is true that some people simply don’t have the financial need and life insurance is not a necessity for them. However, it is also true that the percentage of these people is in the single digits.

• I’m young and single no one depends on my income 

Great! However, did you know that even if no one depends on you, someone will still have to pay for your final arraignments? You may have some debt, such as student loans or credit cards,  that creditors will try to collect from your estate. Unless you have enough savings to cover all expenses and not be a financial burden to someone, you need life insurance. Another thing that you will need to factor in is the chance that you may want to start a family someday. Unfortunately, there is the possibility that something might come up in your health and prevent you from getting life insurance you’ll need.

• I’m a stay at home parent and have no income 

Even though you are not drawing a paycheck every month, you are of a tremendous value to your family. In fact, Salary.com estimates that a stay at home parent earns over $113,000 per year. I stayed home with my kids for several years and I can tell you sometimes it felt like having 2 jobs. If something happens to the stay at home parent, there will need to be major adjustments in the household dynamics and many expenses will emerge.  Just for fun see what you earn:

• My kids are grown up

We hear that a lot… my kids are all grown up and no one depends financially on me.  You’ve entered a different stage in your life and your life insurance needs have changed. Yes, you no longer may need the $500,000 or $1 million in coverage. Based on your personal situation, you may need enough insurance to cover final expenses and medical bills. Did you know that many people view life insurance as estate planning tool? You can reach out to us for more information.

2. It is too expensive

This is probably the second most common myth about life insurance that we’ve encountered through the years and because of it, many people are not even considering getting coverage. The reality is that many people overestimate the actual cost of insurance. You can take a look at the example below or check your rates by filling out the instant quote form on the side.

Example: Samantha is 25-years-old female in good health. She is able to purchase $250,000 20-year term insurance for as little as $13.78 per month.
Tim is 45-years-old male in average health. A 20 year term policy for $250,000 will cost him about  $77.65 per month.

3.Life insurance is complicated

Life insurance is in fact complex, but it is not complicated. There are steps you need to take. First, you need to know your needs, have a realistic budget and select a policy. An experienced agent will guide you through the process. Once you’ve established why you need coverage or what you want life insurance to do for you, it’s a matter of time of matching you with the right product.  There are many resources and tools out there to help you navigate the world of insurance. Think of it like this: “life insurance is a promise that you will still protect your loved ones, even if you are not around.

Please do not put off getting the protection you need, because you feel life insurance is too confusing.

4. You need to be super healthy to get coverage

The truth is you don’t have to be an athlete to get affordable life insurance. Many people are able to secure life insurance with diabetes, high blood pressure or cholesterol. Take the time and explain your medical and prescription history to your insurance advisor. He or she will be able to guide you through the underwriting process and help you secure the best policy for you.

5. You won’t qualify for insurance due to lifestyle or immigration status

The reality is that life insurance companies are more lenient than ever. There are policies available for people who smoke recreational marijuana. Companies are approving life insurance policies for skydivers or scuba divers. There are companies who are even offering life insurance coverage for people who are not permanent residents.

6. Buy life insurance as an investment

Life insurance is designed to cover the financial losses due to someone’s passing. While it has many features such as tax differed growth cash value, it is a life insurance policy. Please don’t let someone sell you on the idea that life insurance can be used as a college savings plan, for example. The bottom line is this, life insurance and permanent insurance in particular build cash value. This is a huge benefit and if structured properly, a life insurance cash accumulation feature can help with living expenses. However, the main focus of this product is to help your loved ones.

7. Buy term and invest the rest

We’ve all heard financial gurus such as Suze Orman and Dave Ramsey advice people to buy term and invest the rest. This is one size fits all advise. It makes sense for many people to purchase permanent protection vs. term coverage. It is all individual based. The other problem is that in reality, not many people will “invest the rest”. This is why it is essential to discuss your insurance needs with a professional who can help you select the best plan for you.

We wanted to list Myths 6 and 7 one after another to stress that everyone has different life insurance needs. Therefore, you can’t group all insurance policies and say that one is always better than the other.  When shopping for life insurance, it is important to know why you need the coverage. This will help you find the best product for YOU. Do not fall for these one-size-fits-all myths.

8. Need medical exam

Nope, not true. Not every company will require a medical exam. There are many non-med options on the market. Don’t take this the wrong way, there will still be underwriting done, just not vitals. This tremendously speeds up the process and in many cases, you may have a policy issued in a matter of days vs. weeks or months.

9. It is very difficult and lengthy process

Going back to myth 8, getting life insurance no longer has to be difficult or take too long. In fact, we’ve taken initial applications over the phone or via e-mail. In other words, you no longer have to leave the comfort of your home, drive to the agent’s office to get coverage. The industry has changed and many agencies are taking full advantage of technology.

10. I have policy through work, so I’m good

Having life insurance through work is great, but simply not enough. Hands down it is the cheapest possible way and probably the easiest. Sometimes all it takes to get coverage is to check a box. However, do not count life insurance through work as set in stone coverage. There are many variables and unknowns. We’ve run across many clients who don’t even know the name of the company issuing the policy; how much the company will pay out; or what will happen if they leave that job. The truth is that if you leave your job, you might not be able to take the entire policy with you. If the insurance company allows you to keep the policy or portion of it, you will be going from a group rate to an individual, based on your age at the time.

11. I don’t want my beneficiary to live it up

This one always gets us. The first time, we heard it; we thought was a customer being funny. However, we’ve heard it quite often and this lets us believe it’s a common myth people have about life insurance. We understand that $250,000 or $500,000 sounds like a fortune, but in reality is not that much. When you figure in final expense, vehicle loan, student loans, time off work after the loss, possibly medical expenses and you are probably reaching the $100,000 mark just months after someone’s passing. Life is expensive. People have a hard time covering the everyday expenses with 2 incomes; just imagine how difficult it will be with one. So no, your beneficiary will not live it up with the death benefit.

12. It is death insurance

While life insurance pays out when the insured dies, there are many policies offering living benefits. This is a true example of just how much life insurance has changed over the years. Many companies have living benefits built into their policies at no additional cost. Below are the most common living benefits. Please note that not every company offers living benefits. If living benefits are important to you, and they should be, please check with your insurance advisor if your policy offers them:

• Terminal illness
• Chronic illness
• Critical illness*

*Please do not hesitate to reach out to us to learn more about the living benefits and how they can help you and your family.

13. I bought coverage, so I can forget about it

Please don’t fall for this myth about life insurance. As you enter different stages in your life, your needs change. Your life insurance policy needs to change as well. It may be a simple update, such as contact information, to change the beneficiaries on your policy or even adjust the coverage amount. It is always a great idea to review your life insurance policy at least every 2 years. There may be a new rate you qualify for or something additional you need to be aware of.

So, there you have them. The most common 13 myths about life insurance debunked. If you would like us to take a look at your personal situation and provide you with an expert advice, simply reach out to us.

You can do so by filling the instant quote form on this page or give us a call at 855-795-LIFE (5433).

Thank you