Life insurance ownership is at a new decade low, and common myths about life insurance may be to blame. More than half of Americans overestimate life insurance costs — at more than three times the actual amount — according to LIMRA.
Here, we debunk the biggest myths about life insurance to uncover how this coverage can protect you and your loved ones. Check out these seven common life insurance myths and the truth behind them.
Myth No. 1: Life Insurance Is too Expensive
BUSTED: Young people are likely to overestimate the actual cost of life insurance as much as five times, according to LIMRA’s 2020 Insurance Barometer Study. In reality, a $250,000 15-year level term policy for a healthy 30-year-old could cost around $250 a year.
Myth No. 2: Only Families With Young Children Need It
BUSTED: Life insurance can be the foundation of financial security for your family or business. Proceeds from a life insurance policy can help cover outstanding debt, like a mortgage and credit cards, or fund financial objectives, including retirement or college savings.
Myth No. 3: Children Don’t Need Life Insurance
BUSTED: Buying life insurance for children guarantees their insurability into the future, meaning it won’t lapse automatically at 18 or 21 if they have a medical condition. Life insurance can be an affordable way to purchase additional coverage as they grow into adulthood. It also makes a great gift of financial security.
Myth No. 4: I’m Young and Healthy and Don’t Need It Right Now
BUSTED: Buying life insurance when you’re young and healthy is best! You can benefit from lower rates and also ensure that you have the coverage — and financial security — you need for the long haul.
Myth No. 5: The Life Insurance I Purchase at Work Is Enough
BUSTED: Employer benefits are often just 1-2 times your annual salary and could end when your employment ends. And comparing life insurance plans probably won’t be at the top of your to-do list when you’re job hunting. Ask yourself, do your loved ones depend on your regular paycheck to pay bills and maintain their lifestyle? If so, you likely need more coverage.
Myth No. 6: Term Insurance Can’t Be Converted to Permanent
BUSTED: Many term policies are renewable and convertible to a permanent policy. After holding your term policy for a set period of time, it may be possible to convert it with a special premium credit. The credit helps offset any increase in premium costs and may waive the usual health assessment.
Myth No. 7: Stay-at-home Parents Don’t Need Insurance
BUSTED: Don’t underestimate the importance of a stay-at-home parent; the value he or she adds to the financial stability of the family is substantial. If the person responsible for child care and general household management is no longer in the picture, you’ll need financial support to help cover those bases and keep your family safe.
Are You Protected?
Don’t make the mistake of not having the coverage you need to protect yourself and your loved ones. Contact your local Farm Bureau agent today to help create a solid financial foundation.