Life insurance is one of those things most people know they should look into, but keep putting off. Sometimes the delay is about cost. Other times, it’s that you simply don’t want to think about death. But in many cases, people avoid it because of things they’ve heard that aren’t accurate. Bad information leads to bad decisions, and when it comes to protecting your family financially, bad decisions have real consequences.
Here are five myths that keep people from getting the coverage they need.
You’re Too Young to Need It
This one keeps a lot of people in their twenties and thirties from even starting the insurance conversation. The thinking goes something like: I’m healthy, I don’t have kids, and nobody depends on my income – so why bother?
Here’s the problem with that: Life insurance gets more expensive as you age. Locking in a policy while you’re young and healthy means lower premiums for the life of that policy. A healthy 28-year-old will pay dramatically less for the same coverage than a 45-year-old with a few health issues on their record. In other words, waiting doesn’t save you money. The reality is that it costs you money.
There’s also the question of insurability. If health conditions develop or a diagnosis happens before you get a policy, you could face higher rates (or even be denied coverage altogether). Getting a policy in place while your health is good will lock in your coverage for the life of that contract.
It’s Only for People With Families
This myth is related to the first one, and it’s built on the same narrow view of what life insurance does. Yes, replacing income for a surviving spouse and children is one of the primary functions of life insurance. However, it’s not the only one. Just consider a few scenarios:
- If you have student loans with a co-signer, that debt doesn’t disappear when you die. Your co-signer actually becomes responsible for it.
- If you have aging parents who depend on you for any level of financial support, your death creates a gap they need to fill.
- If you own a business with a partner, life insurance funds buy-sell agreements that keep the business intact.
- If you have no dependents at all but want to leave something to a cause or organization you care about, a life insurance policy is one of the most efficient ways to do that.
The idea that life insurance is only relevant once you have a spouse and kids simply isn’t true. As you can see, it ignores a lot of real-world financial situations where coverage matters.
Employer Coverage Is Enough
A lot of people have some amount of life insurance through their employer and assume that box is checked. The standard employer-provided benefit is one to two times your annual salary. On a $70,000 salary, that’s $70,000 to $140,000 in coverage.
Run the numbers on what your family would need if your income disappeared. Mortgage or rent payments, childcare, daily living expenses, future education costs, outstanding debts, etc. That employer benefit covers a fraction of the actual need in most cases.
There’s another issue people overlook. Employer-provided life insurance is tied to your job. If you leave, get laid off, or change careers, that coverage goes with it. A personal policy that you own independently of your employer gives you coverage that follows you regardless of where you work.
It’s Too Expensive
This is the myth that stops millions of people. It’s also one that’s simply not true. Studies consistently show that people overestimate the cost of life insurance by a wide margin. Younger people in particular tend to guess two to three times higher than the actual cost.
A healthy person in their thirties can often get a 20-year term policy with $500,000 in coverage for somewhere in the range of $25 to $40 per month. That’s less than most streaming subscriptions. However, the exact cost depends on your age, health, coverage amount, and policy type.
This is where shopping your coverage across multiple carriers to find the best rate makes a big difference, which is something a captive agent tied to a single company simply can’t do. They have access to products from multiple carriers and the ability to shop your coverage across those options to find the best rate.
You Only Need Term Insurance
Term life insurance is straightforward and affordable for most people. You pay premiums for a set period, and if you die during that term, your beneficiaries receive the death benefit.
But term insurance isn’t the only tool available. Whole life and other permanent insurance products build cash value over time and offer tax advantages that term policies don’t. For people with estate planning needs, whole life insurance can be a good option.
Adding It All Up
Life insurance doesn’t need to be complicated. It also doesn’t need to be expensive. While the myths above keep many people from getting the insurance they need, it shouldn’t stop you. Now that you know the truth, you can work with an insurance broker to find the right policies for you and the people who depend on you.