There are lots of misconceptions when it comes to buying life insurance. If you’ve never purchased life insurance before then you’re probably confused by all the misinformation about who really needs it, how much it costs and how much coverage you need. We’re here to debunk the biggest myths about life insurance so you can make an informed decision about buying a policy to protect you and your family.
Myth 1: I’m not old enough to buy life insurance
One of the biggest myths about life insurance is that you only need it when you’re older. In reality, there are many benefits to buying life insurance while you’re young and healthy. Life insurance is significantly cheaper when you’re young, and if you buy a term life insurance policy, you can roll it over into permanent coverage when you’re older.
“While no one likes to think about their death, planning for it by purchasing life insurance is wise and an extraordinary legacy you can leave. The rate for term life depends on factors such as your age, health, driving record and credit. So, the sooner you apply for a policy, the more coverage you may be able to afford,” says insurance expert, Laura Adams. Getting life insurance when you’re young ends up being much cheaper than waiting to buy a permanent policy when you’re 50 or 60.
Myth 2: Life insurance is expensive
Another misconception about life insurance is the price. “One of the biggest life insurance myths or misunderstandings is that it’s too expensive or unaffordable for the average individual or family. If you’re relatively young and healthy, a $500,000 term life policy may cost less than $300 per year,” adds Adams.
Not only can life insurance offer valuable protection while you’re young, but you can easily find a policy that will fit into your budget. Term life insurance policies, which are popular among younger people, are pretty affordable and offer coverage for a specific number of years.
Myth 3: I don’t make enough money to need life insurance
Some people think that life insurance is only important for high net worth individuals, but again, this is just a myth. Adams explains, “Many people also mistakenly believe that you only need life insurance if you’re wealthy. You could argue that having a life policy is especially crucial for those with less to leave their heirs. The purpose of having life insurance is to protect those who depend on you physically or financially after your death.”
If you have a living spouse, children, or other family members who would need financial support if you were to unexpectedly pass away, you should consider purchasing a life insurance policy.
Myth 4: Stay-at-home parents don’t need life insurance
If you are a stay-at-home parent, don’t think you can get away without a life insurance policy. “Another insurance myth is that you don’t need a life policy if you don’t earn an income. That’s false because many families rely on stay-at-home parents for critical work. If they weren’t around, the surviving spouse or partner would have to pay for childcare and perhaps other household tasks,” says Adams.
Consider all the roles you play that would otherwise cost your family money. In many cases, families with one stay-at-home parent are able to avoid expensive costs like tutors, day care centers and babysitters. Even if you’re not bringing in a full-time income, your children and spouse would be impacted financially if you were to unexpectedly pass away.
Myth 5: My group life insurance is sufficient
Many people get life insurance as part of their workplace benefits. But unlike your health or dental insurance, group life insurance through your employer is not necessarily sufficient for your family’s needs.
Group life insurance coverage is usually based on your salary, and depending on how much financial support your family needs, you may need more coverage than what you’re getting. If you have group life insurance, it’s a good idea to supplement it with a personal policy that has higher coverage limits and various riders for customized protection.
The bottom line
Almost everyone can benefit from buying a life insurance policy, regardless of the myths you’ve heard. Purchasing life insurance while you’re young and healthy is a great way to save money over time and protect your loved ones in the event of your death. As you get older, it’s important to assess your life insurance needs and adjust your coverage to match. There are many different life insurance policies on the market, and you can probably find one that fits within your budget at any age.