There are many myths surrounding life insurance. Some of them are misunderstandings of facts, while others are simply bogus. Many Americans opt not to invest in a policy because of all the misinformation they encounter.
Prepare yourself with the facts to make an informed decision about your and your family’s future security. Let’s discuss some of the most common myths about not having life insurance coverage.
Common Life Insurance Myths
1 | You Don’t Need Life Insurance.
It’s one of the top reasons you’ll hear anti-insurance commentators say. “Why bother? You don’t need it.” They are correct. Your life insurance isn’t for you; it’s for your family.
If you contribute bread to the table for your family, so to speak, your passing will leave a gap. How big a gap is dependent on the portion of the accumulated income you were bringing in. If you were the primary breadwinner or the sole earner, that gap might cause a financial burden on your family.
Should you pass after a long illness, outstanding medical bills still need to be paid. So do your funeral expenses. Then there is the mortgage, your child’s or children’s school fee and college tuition, credit card debt, car payments, and so on.
The world will keep on spinning after you’re gone. Your family will still have to deal with everyday necessities. Preparing for this possibility gives them a head start on figuring out how to live in this new life without you in it.
Eliminating the added stress of dealing with heavy financial implications while mourning you is a gift.
Breadwinners aren’t the only ones who need insurance.
Childcare is super expensive. It also causes anxiety in some parents because as much as you vet the hired caregiver, you’ll always worry about the state of your child’s well-being. A stay-at-home spouse cancels both concerns.
Should the primary caregiver pass away, the remaining partner will have to look into hiring a babysitter or nanny if family help isn’t readily available. The hope is that the death benefit issued by your policy will be enough to provide a substantial financial cushion during the time of change.
Let’s look at two other extensions of this myth.
2 | You Don’t Need Life Insurance… If you’re young and healthy.
This myth about youth negating the need for life insurance is another false claim. Your mortality may not register as a concern when you are young and spritely and living your best life, but two things remain true regardless:
- Young and healthy people die too;
- And getting early coverage locks in low premium rates.
Number one on the above list doesn’t need explaining, so we’ll move on to number two.
Life insurance rates go up with age. A twenty-something-year-old will pay less than a thirty-something-year-old in premiums. The same principle applies to someone in their thirties versus someone in their forties.
Your life span is a determining factor, as morbid as it sounds. The science of life expectancy makes you “more likely to die” the older you get. Insurers take this into account when appraising their rates. The younger you are, the more inexpensive the premium costs of insurance.
Your health is also an advantage in determining your future insurability. As with your age, your health affects your premiums. You’ll lose out on more affordable coverage if you develop a serious health condition before purchasing life insurance. Being ill also affects your perceived life expectancy.
Insurance features like guaranteed insurability riders will allow you to purchase additional coverage in the future without a medical exam. Without a medical exam, your existing health issues can’t be used to hike up your premium or make you insurable.
It’s all a numbers game. The lower your numbers, the lower your premium.
3 | Your Health Makes You Ineligible for Life Insurance
Although insurers consider your health when calculating rates and coverage limits, having a preexisting condition doesn’t automatically make you uninsurable.
Some insurers specialize in covering high-risk cases and specific health conditions. They create policies for policyholders with serious health conditions like cancer and diabetes.
If your medical condition affects your premiums, you can reapply. Say, for instance, you’re a smoker or overweight, quitting and adopting a healthier lifestyle can take you out of the ‘red zone.’ Check with your insurance agent about how you can qualify for a reevaluation according to the insurance company’s policy and how you can apply.
Your health doesn’t have to be a factor.
Not all insurance policies require a medical examination. These policies, however, are expensive. You can apply for a guaranteed issue life insurance policy if you are in the eligible age range of around 40 to 85.
Consult with a life insurance agent about the types of life insurance available that best suit your circumstances. Each ‘decline’ you receive may be a red mark on your files. Seek professional advice so you can make the best choice the first time.
4 | You Don’t Need Life Insurance… If you are single without a dependent.
Blood-related dependents aren’t your only possible responsibilities. If you have a co-signed loan, having life insurance will prevent your co-signer from shouldering the debt in your passing. If you have a business partner or a favorite charity, the death payout from your policy would also be invaluable to them.
Consider what will happen to you after you die. Who’ll be in charge of your funeral arrangements? Perhaps there’s a favorite niece or a best friend who’d take up the responsibility. In that case, they can be your beneficiary, with the balance after the payment of funeral costs going to them or being split between multiple beneficiaries.
Setting up a life policy is far more flexible than some people know.
5 | Company-issued life insurance is enough.
Coverages of any sort issued by companies are rarely enough. They don’t take specific details of your life and assets into account. And while a generic policy may work for some, it doesn’t work for all.
It may also be the case where it worked initially, and you’re now married or had a child.
Life changes affect the adequacy of your coverage. With a policy issued by your company, you have no way of tweaking it for a more perfect fit. In other words, you have minimal control over whether you have sufficient coverage.
The monthly premium might be higher for an individual policy, but buying your own life insurance provides freedom and flexibility. Think of it as complimentary insurance protection.
Not relying on a company policy also means losing your job won’t terminate your coverage.
Conclusion
The cost of life insurance goes beyond the monetary value. It encompasses your peace of mind and your family’s well-being. Get all the facts and debunk the myths. Life happens, and you want to be prepared when it does.
A life policy is a smart decision if you have:
- Dependents;
- Co-signed loans;
- Outstanding debt (student loan, credit card debt, etc.);
- Other financial obligations.
Unexpected death hits families hard in their hearts and often in their pockets. Life insurance eliminates financial fallouts and is a wise financial decision to protect your family.
