Life insurance is not discussed as often as it should be, because it is associated with death. Making matters worse, there are many misconceptions and plenty of misinformation circulating out there. This leaves many unwilling to get life insurance, though it is crucial to protecting your family after you pass. Others make bad financial decisions based on misinformation. Here are three common misconceptions people have about life insurance.
You Only Need Employer Provided Life Insurance
Employer provided life insurance just isn’t good enough. First, the employer typically provides only one to two year’s salary for life insurance, even though the average person needs five to ten times their income in coverage.
Second, the employer’s coverage is only in effect when you’re working for them, and this can hurt you at the worst possible time. For example, you lose your employer-provided life insurance when you leave your job. If you are laid off or quit for health reasons, you no longer have life insurance. If you retire early or quit due to health problems, a new life insurance policy will be very expensive.
There is also a fair chance that your life insurance policy through the employer costs you more than you’d pay for an affordable term life policy. If you have employer life insurance, you can also shop for a privately held insurance policy through a site like Insurance Geek at insurancegeek.com. You might be able to get better coverage at a much better rate.
If You’re Young and Healthy, You Don’t Need Life Insurance
Life insurance is often written off by young people as something you only need when you’re older. While it is true that you’re more likely to die as you get older, the fact is that life insurance is for those who are left behind. And young people are more likely to leave a young family and debts behind.
For example, a young single person may want to have a life insurance policy to provide money to pay off their student loans, pay for their burial and help out their parents. Furthermore, it becomes harder to qualify for life insurance as your health deteriorates. Conversely, a term life insurance policy purchased when you’re a healthy 30-year-old remains in effect if you develop severe health problems or a terminal condition at 40.
If You Have Health Problems, You Can’t Get Life Insurance
It is true that life insurance policies are priced based on the risk of dying. This is why life insurance premiums go up with age, and it is why insurers charge you more if you have health conditions like diabetes and high cholesterol. However, that doesn’t mean you can’t get life insurance. You may simply pay more for coverage. Furthermore, you could save money on insurance premiums by opting for term life insurance.
The misconceptions about life insurance explain why more than half of adults say they aren’t interested in buying it. However, the truth is they can’t afford to be without the right level of coverage.