Along with life insurance being an emotional topic for many people, there are often several misconceptions surrounding the subject that can lead to confusion about what coverage provides, how to purchase a policy, and the policy rules regarding coverage. Let’s uncover the truth about some common1 life insurance myths so you can make more confident decisions about whether this type of protection is right for you and your family.
Perhaps you’re among the people who believe they don't need to buy life insurance, and not everyone does. But if someone would struggle financially in your absence, then chances are coverage could be a beneficial addition to your financial plan. Take a look at these following categories and why life insurance may be a good fit.
While stay-at-home parents may not earn a traditional paycheck outside of the home, the services they provide are an integral part of caring for a family. Along with taking care of the children, stay-at-home parents are often in charge of cooking, tutoring, shopping, household maintenance, and transportation—equivalent to a $184,820 annual salary! Having life insurance coverage for a stay-at-home parent can help make the transition after a loss a little smoother by helping the surviving partner cover immediate costs and future expenses, allowing your family to maintain their lifestyle even after you’re gone.
Thinking about death isn’t pleasant at any age, but it’s likely the last thing on your mind when you’re young and single. While the main purpose of coverage is often providing benefits to your family if you passed away, even if you don’t have dependents, there are a few things to keep in mind.
By considering coverage now, you can help your loved ones—like your parents or siblings—handle a variety of expenses if you pass away. Life insurance benefits can be used to cover the costs of medical and funeral bills and help your family pay off your debts, like a mortgage. If you’re single and own a business or have a co-signed debt, the money from a life insurance policy can make it easier for your business partner to continue the company, or it can help a co-signer take care of unpaid bills. Plus, you’ll never be younger than you are right now. Since age and health affect the cost of life insurance, young adults generally pay lower premiums than when they’re older.
While there are benefits to buying life insurance when you’re young, purchasing a policy when you’re older can still be very beneficial. Coverage can provide a way for you to leave an inheritance to your loved ones, relieve the financial burden of final costs such as funeral expenses, help pay for any estate taxes your beneficiaries may face, and assist with paying off any debt you leave behind.
Even if you have certain health conditions, don’t assume getting life insurance coverage is impossible. You can still potentially buy term life insurance even with a range of health issues, such as diabetes, high cholesterol, and some forms of arthritis. Once you submit your application, an underwriter will review the specific details of your situation and let you know if you qualify. Many underwriting parameters have changed in recent years, so don’t count yourself out when it comes to getting the coverage you need.
One of the biggest misconceptions about life insurance is that coverage is expensive. A recent study conducted by Life Happens and LIMRA found that of the group of adult consumers who do not own life insurance, 65% of them list “it is too expensive” as their top reason for not having coverage. In actuality, life insurance can be affordable and fit into most budgets, depending on the type and amount of coverage you choose.
Certain term life insurance policies, for instance, can offer coverage with premiums that cost as little as $160 a year. To help compare, if you purchase a daily cup of coffee at $3, you’ll spend over $1,000 in one year! When selecting a coverage amount, you don’t necessarily need an overly inflated high-dollar policy to put valuable protection in place. Find an option that fits your budget and will help your family to cover final expenses, costs of living, or any other goals you have in mind. As your needs change or your family grows, you can revisit your coverage to see if it still matches your situation and provides adequate financial protection. Remember that life insurance is about safeguarding your loved ones’ futures, so it’s important to focus on the benefits, rather than the cost or premium.
You’re not alone if you think life insurance is a tad puzzling and you feel overwhelmed about where to start. By connecting with a financial professional, he or she can share tools and strategies that simplify the benefits of life insurance and assist you in creating a plan that meets your individual financial goals. During your conversation, your financial professional can answer any questions or discuss potential concerns you might have about coverage. Debunking myths about life insurance can help you make more informed decisions about whether protection is right for you and your family’s future.
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1.Source: 2022 Insurance Barometer Study, Life Happens and Life Insurance Marketing and Research Association (LIMRA). Methodology for 2022 Insurance Barometer Study: The Insurance Barometer is an annual study that tracks the perceptions, attitudes, and behaviors of adult consumers in the United States. In January 2022, LIMRA and Life Happens engaged an online panel to survey adult consumers who are financial decision-makers in their households. This survey generated over 8,000 responses.
LIMRA conducts research on distribution systems for the financial services industry. Life Happens, is a nonprofit organization dedicated to helping consumers make smart insurance decisions to safeguard their families financial futures. Life Happens does not endorse any insurance product or agent.