Four Life Insurance Misconceptions You May Believe
Unlike most insurance agencies, we write all of our blogs internally. This allows us to
pull from our combined experiences in the insurance industry to make sure that we are
only posting content that is accurate and beneficial. This may also explain some of the
When brainstorming on a blog for life insurance, we asked ourselves, “why does no
one want to talk about life insurance?” After a few minutes of silent pondering, the
answer became clear: it’s because you’re dead. You probably wouldn’t want to spend
your Saturday preemptively picking out your gravestone either would you? It’s not fun
to talk about or think about. We get it.
However, this is an important topic that that vast majority of Americans are woefully
unprepared for. Most estimates place the number of underinsured Americans at 60%.
Regardless, there are many misconceptions about life insurance that we need to
debunk. We put our collective heads together at Roland, Abbott, & DeZoort Insurance
and came up with the four misconceptions we hear most frequently.
Misconception #1: Life Insurance is expensive.
This is simply not true. Life insurance is one of the more affordable types of insurance
because the likelihood of death is relatively low. The average person get’s into an auto
accident roughly every seven years. An insurance policy that is expected to pay out that
frequently is significantly more expensive than insurance that is only to be paid once in
a lifetime. Even with a good driving record and a cheap car, your insurance premium
will be at least 5 times more expensive than your life insurance premium. Seriously, it’s
Misconception #2: Life Insurance is only for "old people”.
This statement could not be further from the truth. Empty nesters nearing retirement
with a healthy 401(k) and children out of the house need life insurance less than
someone in their 30’s with young children. The scenario that life insurance aims to
prevent is leaving your grieving spouse with young children and substantial financial
responsibilities. Even though this situation is unlikely for young couples, a 7-figure life
insurance policy can be obtained for an obnoxiously reasonable monthly premium.
This is much more important for someone with a younger family even though the
likelihood of ever using it is low.
Misconception #3: Life Insurance is already provided through my job.
Is life insurance already provided through your job? Great! Have you looked at the
policy recently? You may have a substantial policy and are set! Or it may only be
enough to cover the funeral. Knowing the details of your life insurance policy is
extremely important. It is also beneficial to consider a policy that is separate from an
employer in case you suddenly change careers.
Misconception #4: Life Insurance is for wealthy people.
The logic behind this misconception goes like this: “I’m middle class and can barely
afford my bills as is, so life insurance is a luxury that only the wealthy can afford.”
This logic has always fascinated me. Wouldn’t the wealthy be the least likely to need it
since they already have money to give to the family in case they passed away? The
bottom line is life insurance is substantially more important for those of us in the
middle class than it is for the guy with the mega-yacht.
As Sean, Amanda, and Louis mention frequently, all insurance is simply peace of mind.
It allows you to sleep at night knowing you are protected. Let’s be honest, the
likelihood of you passing away in the near future is incredibly small. But if that
unlikely event happened, the right life insurance policy would make life for your
family that much easier in a difficult time.