Life insurance can provide protection for loved ones. But experts say common misconceptions lead many people to assume that this important aspect of financial planning is not suitable for them.
“If you think you can’t afford life insurance or that you’re not eligible, remember that there are many different types of life insurance. Everyone has unique needs, so finding a policy that fits your circumstances is key,” says Kate Long, consumer financial wellness advocate at Assurance IQ.
To help you navigate the complexities of finding and choosing life insurance, the Assurance IQ team is debunking some of the most common misconceptions:
• Myth: It’s impossible to get life insurance with pre-existing conditions.
Reality: While it may be more difficult to obtain certain types of life insurance with pre-existing health conditions, you have options. If a policy is denied, consider enrolling in group life insurance through your employer, as pre-existing conditions may not be considered when enrolling. Another option could be guaranteed issue life insurance, which can offer lifetime coverage without a medical exam or health questions.
• Myth: Retired people don’t need life insurance.
Reality: Life insurance is often seen as a source of income replacement, but depending on your situation, you may still benefit from coverage even after retirement. For example, if you have debts, such as a mortgage or medical bills, life insurance could help your family pay them off in the event of your passing. It can also help cover final arrangements, alleviating financial stress during a difficult time. The average cost of a funeral with viewing and burial was $7,848 in 2021, making final expense insurance an option to consider.
• Myth: Buying life insurance is too complicated.
Reality: Approximately 106 million adults in the United States are underinsured or do not have life insurance coverage. In a recent Assurance IQ survey, 15% of the uninsured cited a lack of knowledge about what type of policy to get, and 12% cited a lack of knowledge about how much coverage to get as the reason they opted not to have coverage.
“Unfortunately, a large portion of the current population remains uninsured because life insurance sales models have not been designed to serve everyone,” says Long.
Talking to a licensed insurance agent who sells life insurance from multiple insurers can help simplify the process. An agent can ask questions to understand your needs and provide personalized recommendations for relevant insurance products.
• Myth: Life insurance is too expensive.
Reality: Life insurance can be more affordable than you think. Term life insurance can be a great option for budget-conscious consumers who need to protect their income or pay off a debt.
For example, if you have a mortgage, you can buy a term life insurance policy for the length of the mortgage so that your spouse can stay in your home in the event of an untimely death. You can get an estimate of what your term life insurance rates might be with the Assurance IQ calculator at assurance.com/life-insurance/term-life-insurance-calculator.
Life insurance can be an important part of financial planning. Before purchasing a policy, do your research and understand what type of life insurance is right for you.
Source: StatePoint