There are plenty of things in life that should be debated: HBO or Netflix, is NASCAR a sport, cheese or pepperoni, and the quality of the How I Met Your Mother finale; the importance of life insurance shouldn’t be one of them. However, it’s estimated that there are approximately 15.3 trillion dollars worth of unmet life insurance needs in the United States, meaning many people are debating it, and life insurance is losing.
There are many myths and misconceptions surrounding life insurance. Whether it’s regarding the difficulty to obtain it, the perception that you won’t qualify, or that you just don’t need it, people are being deterred from purchasing a life insurance policy that could protect them and their family’s future well being.
So, without further adieu, let’s take a look at some of these common misconceptions about life insurance.
Myth #1: Senior citizens can’t get life insurance.
Busted: It’s true that life insurance costs increase as you get older. It’s not true that you can’t get insured once you become a senior. The perception that you are uninsurable as you enter your senior years is far from the truth. There are still many affordable rates that seniors can obtain. When insurance companies evaluate you for a policy, they determine the likelihood that you’ll cash in on your policy during its term. If you are healthy senior, your age won’t be as heavy of a factor as you’d be led to believe.
Myth #2: Life insurance is too expensive.
Busted: Approximately 80 percent of people over estimate the cost of life insurance. Millennials have been shown to over estimate life insurance expenses by 213 percent and Gen-Xers by 119 percent. Many people think that it will cost them around 1,000 dollars/year, when in reality it can cost as little as 150 dollars/year.
Myth #3: You’re better off saving or investing your money.
Busted: Life insurance is an investment. Though it might not present itself in the form of luxurious vacations or stock portfolios, it’s an investment in your future and your family’s future. Even if the benefits aren’t immediate, the money you’re putting in each month isn’t just getting thrown away; it’s helping you be more prepared for life’s curveballs.
Myth #4: Only the breadwinner needs life insurance.
Busted: Just because someone doesn’t bring home the largest check in the house, doesn’t mean his or her contributions aren’t valuable. A stay-at-home parent has a lot of responsibilities that keep the day-to-day activities on track that aren’t necessarily quantifiable in the form of a single check. If something were to happen to the “non-employed” or lower salaried parent, life insurance can help cover the costs of the jobs that they contributed to the household, including childcare and home maintenance.
Myth #5: You’re too young to be buying life insurance.
Busted: Being young is one of the best ways to save money on life insurance. Buying a plan as a healthy person at the age of 30 can cost you around 12 dollars per month, whereas that same policy can cost you 32 dollars per month if purchased at the age of 50. Additionally, more than just the worry of increased costs, there’s always a chance you won’t even be able to qualify for a policy after certain things happen later in life. Your insurability can change in the blink of an eye and is never higher than when you’re young and healthy. In three, five, or even10 years, there are plenty of things that can happen that could make getting life insurance less of a reality, which is when you will probably need it most. When you’re young and in good health, premiums will most likely be lower and insurability higher, saving you money in the long run.
Myth #6: You’re single and don’t have dependents, so you don’t need it.
Busted: Just because you don’t have anyone who directly depends on your income now, doesn’t mean you can’t plan for it now. Getting life insurance before these major life events can help lock in a lower rate. Additionally, funeral costs will be made the responsibility of your family (the average funeral costing thousands of dollars) and co-signed loans aren’t going away as they would become the responsibility of the co-signer.
Myth #7: The plan you have through your employer is sufficient.
Busted: Many times employer life insurance benefits provide a payout that is closer to one or two times your base salary. That base salary will typically not include commissions or bonuses either, which could impact the amount greatly. Generally, it is recommended for your life insurance policy payout to be somewhere between five and eight times (some experts even recommending 10-12 times) your annual salary. Additionally, if you leave your job, that employer benefit probably won’t be coming with you, leaving you vulnerable. Getting your own personal policy can help ensure you are protected and your family will be secure.
Life insurance is something you buy before you need it. Don’t let common misconceptions keep you from insuring yourself properly. By learning the facts and what fits best with your lifestyle, you can make an informed decision about your life insurance policy, and help prepare you and your loved ones for the future.