Busted: Top 10 Life Insurance Myths

For many, the subject of life insurance is uncomfortable. Let’s face it, no one really enjoys facing the idea that they could leave their family before they’re ready. Believe me, I understand. I’d be willing to bet, however, that you’d do just about anything to protect your loved ones.

When it comes to ensuring your family’s financial future, it’s vital that you take the time to separate fact from myth. To help you on your quest for the truth, we’re here to debunk the 10 most common myths about life insurance. Armed with the facts, you can make an informed decision, ensuring your loved ones are financially set should something happen to you.

Myth #1: Smokers can't get life insurance

While smoking is one of several factors that will determine your rate class, it is seldom the exclusive cause for denial. However, since non-smokers are typically given a better premium rate, smokers are encouraged to quit before applying for a policy. Most insurance companies require at least a year smoke-free before qualifying you for a non-smoker’s rate.

Myth #2: I'm single, or newly married with no children – I don't need a life insurance policy

When we think of life insurance, we often picture middle-aged couples with young children in the home. While life insurance is more critical for individuals with dependents, that doesn’t mean they’re the only ones to benefit. Remember – the younger and healthier you are, the lower the premium. So, planning early not only ensures your loved ones are able to pay off any outstanding debts you owe, it also locks in your premium at the lowest rate possible.

Myth #3: Life insurance is too expensive

According to a recent study, 64% of polled consumers are unaware of the actual cost of life insurance, believing it’s 3 times more expensive than it really is. The truth – while there are expensive policies available, life insurance doesn’t have to destroy your budget. Start out with an affordable policy, and purchase additional coverage as your needs and financial situation evolve.

Myth #4: I’m overweight; I’ll never qualify for a policy

To qualify for a life insurance policy, you will be required to answer some questions about your physical and mental health, including how much you weigh. While obesity will likely result in a higher rate class, it doesn’t necessarily disqualify you from a policy. If you’re concerned, open up a dialogue with your agent; they’ll be able to recommend the best policy for your unique situation.

Myth #5: I'm a stay-at-home parent with no income coming in; I don't need life insurance

Whether you're a stay-at-home parent or the primary breadwinner, life insurance is still an important component in planning for your family’s future. Consider all that you do for your family, day-in-and-day-out. If something were to happen to you, how much would it cost to replace those services annually? Life insurance could help cover these expenses, ensuring the household runs smoothly after you’re gone.

Myth #6: Buying a term policy and investing the rest is always the best option

While this is a great option for some families, it’s not for everyone. There are a number of factors to consider when deciding between term and permanent insurance. Your agent can help identify which type of policy will best meet your family’s needs, both now and into the future.

Myth #7: My employer provides me with a life insurance policy; that’s all I need

Many consumers are under the impression they can take their employer-offered life policy with them when they leave or are laid off. Unfortunately, this policy is non-transferrable, leaving you with no life insurance protection. Additionally, these policies are typically limited in coverage, with barely enough to cover funeral expenses.

Myth #8: The face value of my policy should be twice my annual salary

While there are a few formulas you can use to determine how much coverage you need, there’s no set rule that applies to everyone. Careful consideration of your family’s financial situation is necessary to determine the amount of insurance that should be purchased.

Myth #9: If I purchase a term life insurance policy, I’m stuck with it for life

Many term policies offer the option to convert to a permanent policy at a later date. When reviewing options with your agent, ask about the available riders for each policy you’re considering; and be sure you understand the terms of conversion upfront, as most policies require term conversion within a specified period of time.

Myth #10 My life insurance death benefit is only payable upon my death  

As mentioned above, most policies offer rider options for an additional premium. One rider, called the “Acceleration of Death Benefit Rider,” allows insureds access to the policy’s death benefit under certain circumstances. Qualifying injuries and illnesses vary from policy to policy, so be sure to ask your agent for details on the policies you’re considering.

Are you considering life insurance, but feeling hesitant? What’s holding you back? Please share your reservations below; who knows, maybe we can “bust” another popular myth.