How to navigate the Seven Deadly Shouldn’ts

Full awareness of just what insurance will do for you is as valuable as the policy itself. When the time comes for coverage to do its job, many Americans find out the hard way that they were in the dark about the benefits. From confusing policies to outright myths, the reputation of life insurance suffers by too much misinformation. Read on to discover some common misconceptions about life insurance and how you can gain a better grasp of it.

Myth Number 1 – Life insurance is too difficult to understand and takes too long

100 million Americans without life insurance certainly means something.

More than half find the process of taking out LI to be difficult to comprehend, while two thirds place it on par with the dreaded filing of taxes. In reality, purchasing insurance is becoming easier by the day. P2P purchasing via mobile phone has seen a rise in policies bought via mobile devices (sales have tripled since 2011). Some people can qualify for simplified underwriting; an application process greatly sped up by removing the need for a medical exam.

The non-profit organization Life Happens is dedicated to demystifying the whole process and helping Americans appreciate the value of insurance. They offer this quick and helpful resource to get users started and this calculator to tally up projected LI needs. Of course, the number one way to streamline the LI process is to speak face to face with a qualified insurance provider who can tailor the perfect policy to your individual needs.

Myth Number 2 – LI will be too expensive

Not so! While it’s true that policies can offer a great many benefits, a simpler one containing only the basics is more affordable than you may think. It will differ between providers but there is always the option of adding more benefits to your existing policy as time goes on, should you feel the need.

On average, a 30-year old man could be expected to pay as little as $156 for a $250,000 policy and in the region of $416 a month for coverage of a million. A lady in the same age range could pay as little as $141 and $347 for the same coverage amounts, respectively (coverage for women is always cheaper than for men).

For a quick calculator, click here and find out more.

Myth Number 3 – All policies are the same

Life insurance is actually split into two basic and distinct types: permanent and term. Term insures for a given period of time. This could be a single decade or many, depending on a reasonable estimation of when the insured will pass away. A policy holder in their 80’s won’t reasonably be expected to hold a 30-year term, likewise a person in their 30’s is unlikely to be under 10-year term coverage.

Permanent life insurance is designed to be ongoing until the event of death and typically has a savings component. Permanent branches in three subdivisions:

Whole life is designed to be pay out a certain amount in the event of the policy holder’s death. Typically, the premiums paid will go into a savings account in this type of insurance (also known as its cash value).

Variable life offers the added factor of financial investment. Its savings account can be used to invest in shares, stocks, bonds, etc. (usually pre-selected by your insurance provider).

Universal life blends aspects of whole and variable life. It builds funds that can be saved, cashed out, or moved between premiums and investments as your circumstances require.

Myth Number 4 – The life insurance I have through my job is enough

The peace of mind you get from having life insurance through work is understandable. 108 million of us are covered by group insurance according to the Life Insurance Marketing and Research Association. However, not having your own personal policy could backfire. If you lose your job or your employer goes out of business, there’s a likelihood that your work-based insurance will disappear too.

You’re also giving up control to your employer, who will choose the provider for you (and it may not be the cheapest option). You can read this article for a deeper look at why job-based life insurance could be a bad move.

Myth Number 5 – I’m in bad health so can’t be insured

Yes, it will be more expensive if you’re ill, but life insurance can still be obtained. Since 2014, insurers have been forbidden to turn away anyone in poor health. If your condition is a temporary one (and insurers have varying opinions on the nature of that word) it’s certainly a rosier outlook than a long-term health condition. If one should develop, then it’s not uncommon for an insurer to alter an existing policy to suit the new circumstances.

Conversely, don’t believe the myth that if you’re in great health you don’t need LI. It’s best to be prepared and not to forget that for every year that passes you’ll cost more to insure. In effect, you’re never too young to start saving.

Myth Number 6 – Single people don’t need it

You may not be married and have dependent children, but chances are you still have family. If you pass away and leave outstanding debts or funeral costs, then these amounts will become their problem. If having no family applies to you, you might consider taking out life insurance as a legacy to support a charity or other worthwhile cause which means a lot to you.

Myth Number 7 – A homemaker is less important than a breadwinner

If you’re the spouse of the wage earner; don’t think you don’t need your own policy. Your domestic services may not be salaried, but should you pass away, it will become all too clear exactly how valuable they are.

If something happens to you then your partner will be in one of two positions. The first is that they will have to continue working and require extra funds to care for younger children via nannies, daycare, etc. Second, your surviving partner may have to quit work and stay at home to care for the family. In the latter case, a homemaker’s life insurance would be a great help in shouldering any lost income.

It bears repeating that the best way to clear up any misconceptions about life insurance is to meet with a professional advisor. It’s our job to stay up to date on the insurance field and make sure we dispense accurate and considerate information to our clients. If you’re unsure about it or are thinking about taking out a policy, we’re standing by to make it a clear and comforting process.

Avante Insurance is a South Florida family owned and operated insurance agency providing an array of insurance services to meet customer’s individual needs. For advice on all kinds of insurance, you can call us at 305-648-7070, request an insurance quote or contact us with any questions or comments.