When it comes to life insurance, there are countless misconceptions that can put you off buying cover. In this article, we will debunk 9 common myths about life insurance, and shed some light on them.
Myth 1: I don't need life insurance when I'm young
Even if you're young, that doesn't mean you don't need a policy. After all, death can happen at any stage, whether old or young. You may even have a family already in which they'll need protection.
The stand out benefit of getting life insurance at a young age is the ability to lock in a lower rate. Premiums are based on your current age, health, and other factors, so the younger you are, the less you'll pay for coverage.
Myth 2: I'm single with no dependents, so I don't need cover
Some believe that life insurance is only relevant for those with dependents to support. However, life insurance can serve various purposes, such as covering funeral expenses, paying off debts, or leaving a legacy to charitable causes.
Even singles should consider life insurance as a means of easing the financial burden on their loved ones in the event of their passing.
Myth 3: Employer-provided cover is sufficient
Many people assume that the life insurance cover offered by their employer is enough to meet their needs. While an employer-provided plan is handy, it often falls short of providing the protection families need.
Assess whether the coverage amount is adequate and whether it would be portable if you left your job. Combining employer cover with a personal policy can help provide greater financial support.
Myth 4: Life insurance is expensive
One of the most persistent myths is that life insurance is expensive. The truth is that the cost of life insurance can be surprisingly affordable, especially for younger people.
Term life insurance, in particular, offers a cost-effective option. It offers cover for a specific number of years. It pays out a cash lump sum if you die during the term. The downside is that if you outlive the term you receive nothing back.
If you're looking for something long-term, whole life insurance can provide permanent protection. It pays out a lump sum regardless of when you die - so long as you keep paying your premiums.
Myth 5: Only breadwinners need life cover
Another myth is that life cover is only needed for the main earner in a family. While the loss of income is a big issue, having protection may cover other contributions of a spouse, such as childcare and household responsibilities. In essence, it can help a family survive if it loses one of its members.
Myth 6: I'm healthy, so I don't need Life Insurance
Good health is no doubt an advantage when buying life cover, as it often results in lower premiums. However, waiting until health issues arise can limit your options and increase costs.
Much like death, your health can change at any stage in life, so consider getting life insurance as soon as possible. If you're worried about your health, you may want to look into critical illness cover. This payout is if you are diagnosed with a serious illness, such as cancer, stroke or heart attack.
Myth 7: Life Insurance is an investment
Despite popular belief, life insurance is not an investment. While it can provide financial security and peace of mind in the event of your passing, it does not help you build wealth. Instead, it's intended solely to provide a lump-sum payment to your beneficiaries upon your death.
Myth 8: Life insurance is unnecessary if I’m rich
You might think life cover isn't necessary if you are well-off. After all, why would your family need to claim a lump sum payout if they can pay the bills? But life insurance can be a valuable part of financial planning, even for the wealthy.
Myth 9: You can always buy cover later
Think of yourself as a gambler? Well, delaying life insurance can be a risk. As we age, health risks increase, potentially leading to higher premiums or even insurability issues. Securing cover early not only ensures lower costs, but also peace of mind.
Whether you're single, a young professional, or a high-net-worth individual, understanding the nuances of life insurance can help you tailor a policy that meets your unique needs.
Before you start looking for cover, think about why you need it, like:
To protect your loved ones financially in the event of your death
To cover costs such as funeral expenses and any debts you may have left behind
To help replace income if you are unable to work due to illness or injury
To provide security for retirement
Head online and compare policies to find the best life insurance to meet your needs.