Shopping for life insurance can be stressful, especially if you don’t know the facts. You may have heard that it is prohibitively expensive or that only healthy individuals qualify for coverage, but the facts may surprise you.
We break down six common life insurance myths so you can better understand your options and get coverage that’s right for you.
Myth 1: Insurers won’t pay out if you’ve had a COVID-19 vaccine
The payout from a life insurance policy is unaffected by whether or not the policyholder received the COVID-19 vaccine. Additionally, applicants are not denied coverage just because they received the vaccine. In fact, immunizations frequently cut mortality rates by lowering the chance of disease-related death.
Concerns about whether life insurance will cover COVID-19 deaths are mainly unwarranted. Most life insurance policies cover infectious disorders, including COVID-19.
Myth 2: Life insurance is expensive
One of the most common misunderstandings regarding life insurance is that it is too expensive. According to the 2022 Insurance Barometer Study, conducted by marketing and research firm LIMRA and life insurance-focused nonprofit Life Happens, more than half of Americans believe term life insurance costs three times as much as it actually does.
In truth, the average cost of life insurance can be rather low, particularly among younger generations. This is because the younger and healthy you are, the longer your life expectancy.
Use internet calculators to figure out how much life insurance you need. Once you’ve determined the sort of policy and coverage level you want, compare life insurance quotes from various firms to find the best deal. If you are unsure where to begin, consult with a fee-only financial advisor to better understand your alternatives.
Myth 3: You don’t need life insurance if you’re young and healthy
Although mortality may not be a major priority when you are young, buying coverage early might help you lock in affordable rates. This is useful because the cost of a policy can increase as you age.
Your future insurability is another thing to consider. If you encounter a health condition before purchasing life insurance, your options for affordable coverage may be limited. Guaranteed insurability riders, for example, allow you to acquire additional coverage in the future without having to undergo a medical examination.
Myth 4: If you have health issues, you can’t get it
Although insurers normally assess your health to determine premiums and coverage amounts, having a pre-existing ailment does not preclude you from purchasing life insurance. In fact, some insurance are designed expressly for persons with certain health issues, such as diabetes.
You can avoid the medical exam with simplified issue life insurance. These policies require only a brief health questionnaire. If you don’t want your medical history to be a factor, look into guaranteed issue life insurance. Acceptance is guaranteed regardless of your health status, as long as you are within the acceptable age range.
Myth 5: If you’re single and have no dependents, you don’t need it
Life insurance is not only for breadwinners. For example, if a parent, sibling, or friend cosigned your mortgage, life insurance can assist them pay it off if you pass away.
You can also utilize life insurance to leave an inheritance to someone who is not financially dependent on you, such as a niece or nephew. Similarly, if you support a charity or nonprofit, you can designate a portion or all of your life insurance death benefit to the organization.
Life insurance for small business owners can provide a financial safety net. For example, your partners may use the dividend to buy out your stake in the company.
Myth 6: Life insurance through your employer is sufficient
Group life insurance through your employer is normally one or two times your pay, which may be insufficient to support your loved ones.
Another thing to consider is portability. Free policies at work are sometimes linked to employment, so if you leave, you may lose your coverage. Individual life insurance covers you regardless of where you work.
When dealing with a certified agent or financial counselor, ask them to walk you through the many types of life insurance. One type of life insurance isn’t necessarily better than another; it’s about what’s right for you.
