6 Common Insurance Misconceptions You Must Avoid

insurance misconceptions
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Insurance is one of the most people’s least favourite financial topics, avoiding it all cost. When people think of a life insurance adviser, they think of someone who will just get their money and receive nothing in the end. This leads to insurance misconceptions about their life, health and even cars. Insurance is something that almost everyone needs and being uninsured can be devastating to your family’s well being especially when you’re the only who provides for them.

Below are some of the most dangerous misconceptions about this misunderstood topic:

Myth 1: Only the breadwinners need to buy life insurance

No, it is wrong. What if something happens to the stay-at-home parent or spouse related to health? Insurance will sure cover the needs of the stay-at-home parent or spouse, avoiding spending too much money on medical bills. Insurance on the stay-at-home spouse also gives the working parent the opportunity to take time off work and help the family adjust to their loss. Get rid about such health insurance misconceptions which exist in the minds of almost everyone.

Myth 2:  Buying insurance would cost too much money

Most of the studies about insurance point out that only 10 percent of Americans buy life insurance. The main reason is their thinking that insurance is too expensive. They think that a $250k in a 20-year level term policy for a healthy 30 something would cost $1k a year or over when it actually would cost only around $150. Calculate wisely to avoid such insurance misconceptions.

Myth 3: If you are young and healthy, there’s no need to buy insurance – A Common misconception among youth

The life insurance needs you are going to buy would depend on many factors. It is always recommended to purchase a policy when you are still young because it would only cost the least. Insurance adviser would say that you should buy policy when you still don’t need it.

Myth 4: If you’re single and no dependents, insurance is not an option

Single people still need to get a life insurance in order to cover some costs of medical and funeral debts, and other personal debts as well. An uninsured person may leave a problem to the family on unpaid expenses. In addition, insurance can be a good way to suffice low-income singles to leave a legacy to a favourite charity or other cause.

Myth 5: Everyone should purchase term and invest the difference

Most of the time, it is recommended to purchase a permanent policy if you need to have life insurance for your entire life. It may cover the special needs of your child, if there’s any or plan to have one. It may also help in estate taxes. The cash value you can get from it can be a good investment as well.

Myth 6: Your company’s provided life insurance is enough to cover expenses

Yes, a lot of companies are providing life insurance for their employees. It is equal to 1-2 times your annual salary and you may even be able to purchase up to 4-6 times your salary. However, you may lose it when you leave your job. You can get better deal on your own than from your company. You can purchase an individual policy that locks in your rate for a period of time or allows you to build cash value if you want to keep the policy your whole life.

Each of us has unique experiences and so, the kind of insurance we need in our loves. Before jumping into the agreement with insurance company, make sure you are knowledgeable enough to know the benefits and coverage you will get.

Don’t risk your life thinking about such meaningless insurance misconceptions. Act smart ! Live wiser !

About the Author - Candice Larson
Candice Larson is an advocate of free-worry life. She’s into writing and travelling. Candice works full-time in an advertising firm and at the same, attending MBA.