Three Most Common Life Insurance Myths Debunked

Aug 10, 2022

Life Insurance

Three Most Common Life Insurance Myths Debunked

Most people don’t like to think about life insurance, let alone plan for it. In any case, you will eventually have to consider it, so being informed before making a choice is a good idea. Although everyone knows the importance of life insurance, very few people understand how it works. Many of the commonly held beliefs about life insurance are not true.

Read on to learn how three of the most common myths about life insurance gets debunked.

Myth #1: My Employer Provides Life Insurance for Me.

Life insurance is typically covered in an employee benefits program. It can be a valuable protection for you and your family, but most employer-provided plans fall short due to the conditions that insurance companies require to underwrite them. In addition, companies often offer no guarantee as to the amount or length of time such coverage will be available. The coverage provided may not be adequate for your needs. Funeral costs alone can run from $7,000 to $10,000 and if any disabilities occur or debts are left unpaid, your family can be at risk of losing their home or worse. A simple life insurance policy purchased on your own could cover you for several unexpected expenses as well as provide adequate resources to help loved ones through a difficult time and lessen the financial burden in case you pass away.

Myth #2: Employer-Provided Life Insurance Lasts Forever.

Employer-provided life insurance is not usually portable. That is, if you leave your job for any reason, your coverage will end. This includes retiring, changing jobs, or being laid off. Furthermore, a company may decide at any time to discontinue that particular employee benefit, leaving you without coverage. And while your employer may provide supplemental coverage at a cost, depending on your health, it may be more expensive than purchasing a new policy. Similarly, some employers allow you to purchase supplemental coverage for your spouse, but your employer rarely pays for it, and purchasing it on your own may be more cost-effective.

Myth #3: Life Insurance Coverage Is Too Expensive.

More than half of all Americans underestimate the cost of life insurance by up to three times. This is especially true for younger generations, with Millennials believing it costs six times as much as it does. The cost of life insurance is determined by four major factors: your age, your health, the type of policy you purchase, and the amount of coverage you wish to buy. In general, the younger and healthier you are, the less you will pay.

Life insurance is necessary and should be a part of every person's financial plan. However, because there are numerous misconceptions about how life insurance works, some people can be unclear about how to go about buying it.

Every family's life insurance needs are different, and what may work for one family may not work for another. You should speak with an insurance agent to choose the ideal life insurance that best suits your needs. If you have any questions about life insurance or want to learn more about the various types of coverage available to you in Thousand Oaks, CA, contact our professionals here at Udell Family Insurance.

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