Buying life insurance is often a misunderstood process.
While there are many misconceptions about life insurance, there are 5 life insurance myths that confuse people who are considering putting this protection in place for their family.
Life insurance has many purposes depending on your stage of life. As a young, married adult with small children, life insurance protects the family from financial burden by bridging the gap created by a lost income. Empty nesters rely on life insurance to take care of the spouse left behind during the retirements years. Finally, seniors often use their life insurance to pay for final expenses such as funeral costs, outstanding debts, and leaving money to family members.
At all ages, it is important to understand the truths about life insurance rather than be confused by the 5 life insurance myths that can keep you from getting the best life insurance coverage for your individual needs.
At its heart, having life insurance is an act of love that applies to all stages of life.
You don’t need life insurance when you are young and healthy.
“Life insurance is for people who are old.”
“Life insurance is only for people over 50.”
“I have plenty of time to worry about getting life insurance later.”
Maybe you have said or thought one of these common reasons people give as to why life insurance isn’t considered needed for young, healthy individuals. In truth, the opposite is true. Life insurance is as important for the younger generation as it is their parents and grandparents.
The starting point to understanding the necessity of life insurance is to realize that it serves and protects the family and loved ones of the person who is insured. Protecting family and friends from the unexpected expenses that come along with a death in the family is needed at any age. In fact, one of the best times to secure life insurance is when you are young and healthy because insurance rates are based on age and health. Therefore, the younger and healthier you are when you begin your policy, the lower the monthly premium is for a greater amount of insurance.
Another reason to get the insurance at a young age is that it establishes life insurance as an regular part of your monthly budget so that as years go by, it isn’t something you have to add in later, when more monthly expenses come along with buying a home and starting a family. Most people in their 20’s feel invincible and dying is far from their minds. Sadly unexpected tragedies do happen and the leading cause of death for those in their 20’s is accidental death. Young, healthy individuals have great reasons to buy life insurance- getting the most coverage at the lowest rates, establishing the routine of having life insurance in the budget, and protecting friends and family.
I can’t afford life insurance on a fixed income.
This common myth of affordability is the exact reason you cannot afford NOT to have life insurance. Don’t leave your loved one’s with debt and to pay for funeral services.
Most people overestimate the cost of life insurance and assume the monthly premiums are way beyond their budget. In truth, there is a life insurance plan available for every budget. The first step is to work with an independent broker who works with many companies. A broker is able to find the company that perfectly fits your budget and individual needs.
When you consider the importance of protecting your family against the high cost of funeral expenses, most people can find a little wiggle room in their spending to allow for a smaller life insurance policy to be put into place. A lot of people don’t realize that you can start with whatever size policy you can afford and if you are able to afford more later on, you can add another policy to it and increase the death benefits that will be paid out to your family.
The key is to get started with something now and then add on as you are able until you have enough to pay for the final expenses that will be owed upon your death. Just be realistic as you enter the process and accept whatever amount you can afford and rest assured knowing you have taken the first step in protecting your family through securing a life insurance policy.
I have too many health problems to qualify for life insurance.
Life insurance companies base approval on age and health. So it is commonly thought that some people cannot qualify for life insurance if they have current or past health problems.
The best way to understand how health problems affect getting life insurance is to walk through the types of insurance policies and coverages. The first type of insurance to consider is term life insurance. Term life insurance is for those people in good health.
There are health problems and conditions that disqualify applicants from being approved for term insurance. Term insurance is in effect from the day of purchase and has an expiration date set a predetermined number of years in the future. Common term amounts are 10 and 20 years. The monthly premium for a term life insurance policy is typically lower than other types of insurance because better health is needed to qualify and these policies expire at some point. Another type of insurance is whole life insurance.
Whole life insurance is different than term life because it never expires as long as the monthly premiums are being paid. Another difference with whole life insurance is that there are levels of coverage based on health and ALL applicants can be approved for some type of whole life insurance. This is where the myth is busted because everyone can get approved for some type of whole life insurance policy. The main considerations is that some whole life policies are in effect from day one but others have a waiting period, especially for those with serious health conditions. But the good news is that all people, regardless of health, CAN get life insurance to take care of their family.
You can’t buy life insurance for your parents.
When you think about it, life insurance isn’t for the person who is insured- it is for the family who is left behind. Many people don’t realize that you can purchase life insurance for your parents if they aren’t able to do that for themselves. This is a tremendous gift, not only to the child who will know that funeral expenses will be paid, but also to the parent who will know that they aren’t leaving behind a financial burden for their family.
The process is slightly different for when purchasing a life insurance policy on a parent. The parent is considered the insured. This means that they will answer all the health questions, agree to have the policy started on their behalf, and the death benefit would be paid out upon their death to the beneficiary. The child who is paying for the policy is considered the owner of the policy. The child is normally the beneficiary is this case but can be someone else. The insurance company will verify that this person has an insurable interest in the parent being covered. This means that the person purchasing the policy is a family member who has a vested interest in the person being insured.
Other than those details, the rest of the process is the same as a regular life insurance policy. In many cases, it is a wise decision for a child to purchase a life insurance on behalf of their parent, giving all involved the peace of mind that financial matters will be taken care of.
You should buy life insurance from your local insurance agent.
Nostalgia takes over and we long for the days of having a cup of coffee with our local insurance agent who knows the names of everyone in your family, right down to the dog! Sadly, those days are gone but that doesn’t have to be all bad news.
Agencies who represent one insurance company do not have options to offer their clients who might have a unique situation that causes the application to be red-flagged and rates to be higher due to a chronic illness, past health problems, or even family medical history. That is why insurance brokers who represent numerous insurance companies are the best way to get life insurance.
With advances in technology, you can still have a personal touch of dealing with one agency but the advantages of having relationships with national companies who specialize in every age group, health category, and budget so every person looking for life insurance can get the best value using an insurance broker. When the individual agent working with just one company handles your life insurance, their client is really the insurance company because they are automatically going to sign up your policy with that company.
With a broker, the reverse is true- YOU are the client and the insurance company that gets your business is the one who can give you the most coverage at the lowest monthly premium, regardless of age and health. You get the most value by using a broker with access to numerous, reputable, nationwide companies. They will get your policy started in a quick and efficient manner so you can get back to your coffee with friends and family, knowing that your financial needs for them will be met.
5 life insurance myths – BUSTED!
Whether you are just out of college or in your twilight years, all ages have a vested interest in protecting your family with a life insurance plan. With plans of all sizes to fit all budgets, there is no reason to wait.
Don’t let the misconceptions about life insurance plans keep you from exploring the options and finding the perfect life insurance plan for you and your family.
Spectrum Insurance Group is made up of professional life insurance agents who are licensed in all 50 states and the District of Columbia. Spectrum Insurance Group has helped 1000’s of people purchase life insurance online & over the phone.
All content on this site has been written by life insurance experts & licensed life insurance agents.