We’ve talked before about common car insurance myths, and today, we’re going to turn our myth-busting quest to another form of insurance: life insurance.
Myths about life insurance are surprisingly common. Given that life insurance is something that few of us like to think about, it’s no surprise that the void of discussion leads to the rise of a variety of misconceptions about what these policies actually entail.
In an effort to redress the balance and introduce facts into your life insurance decisions, we’re going to bust these life insurance myths once and for all, starting with…
Myth: “Life insurance is a waste of money.”
Many people argue this and, to an extent, there’s some truth behind it. For example, life insurance could be considered to be a waste of money for you specifically. After all, you’re not going to be the person who benefits from the policy, your family is. So if you’re only looking for insurance policies that are specifically going to benefit you, life insurance isn’t of great use.
However, there are a few mitigating factors that make it clear life insurance can benefit you. These benefits might not be financial, but they are worth plenty…
- Peace of mind. You don’t have to worry about what happens to you after you have passed; you can be safe in the knowledge that your family will be financially taken care of.
- Additional policy benefits. It’s also worth considering that many life insurance policies have additional benefits, such as Critical Illness Cover, which can benefit you directly also.
Myth: “You can’t get life insurance if you have a health condition.”
A common misconception and one that, at least superficially, makes sense— but this is one myth that is 100% wrong.
If insurance companies did choose to deny coverage to anyone with a health condition, they would deny coverage to 90% of people. We all have something in our medical history, and insurers know this. As a result, pre-existing conditions are not a barrier to obtaining life insurance.
If you’re still concerned about this, then investigate no medical exam policies provided by the likes of Transamerica. While you will usually need to disclose your medical history to a “no medical” provider, the lack of need for an actual physical exam is extremely useful if you’re concerned about your health history.
Myth: “Life insurance costs a huge amount of money.”
Many people believe that life insurance is incredibly expensive and, in some ways, they’re right: life insurance can be incredibly expensive. However, life insurance can also be incredibly cheap.
It’s important to remember that life insurance operates on a sliding scale. The more you are willing to pay for your premium, the higher the payout on your death. If you need to pay less, that’s fine; this will be reflected in the potential payout, but it will still be a substantial sum. When it comes to buying life insurance, you are in complete control of how much you want to spend.
Myth: “You should save and invest money rather than buy life insurance.”
This is a very strange myth, as it suggests that you can only buy life insurance or save and invest money. In reality, you can do both, depending on what your goal is. Buying insurance is a good idea; saving money is a good idea; sensible investing is also a good idea— so why limit yourself to just one option?
Alternatively, if you’re on a budget and cannot afford to go for all three options, then there’s nothing to say that saving or investing is inherently preferable to insurance. In fact, there are arguments to the contrary if you are trying to provide for your family in the event of your death.
If you pass away earlier than expected in five or 10 years, it’s unlikely that you will have been able to save a particularly large amount of money. You would be eligible for a large insurance payout in the same amount of time (provided you’d paid your insurance, of course).
Myth: “Young people don’t need life insurance.”
Morbid as it sounds, death can happen at any age. If there are people who depend on you financially, then your age is irrelevant to whether or not you need life insurance.
Life insurance is a great product that can provide peace of mind for you, and protection and security for your loved ones. Hopefully, you have found the above myth-busting useful, and are now able to purchase life insurance with complete confidence.