Five Myths About Life Insurance

Separating myths from facts about life insurance

Life insurance may sometimes seem complicated and confusing, given the many insurance providers, kinds of coverage, and insurance policies. Before making a choice, it’s important to thoroughly research your options and, if you research online, to consider also the source of the information.

To help you separate fact from fiction, Gerber Life sets the record straight on five common myths about life insurance:

1. “Life insurance is expensive.”

Eighty percent of consumers misjudge the price of term life insurance, according to a 2015 Insurance Barometer Study by LIMRA, a worldwide insurance-industry research organization, and Life Happens, a nonprofit educational organization concerning insurance and related products. According to the study, Millennials overestimated the cost of term life insurance by 213 percent, while Gen Xers overestimated by 119 percent.

What’s the reality? Not all life insurance policies are created equal and some are more affordable than others.

Term life insurance is typically one of the most affordable options for life insurance because it often has the lowest monthly premium. Term Life Insurance policies start at less than $10 a month.For example, a $25,000, 20-year Gerber Life term life policy for a healthy female aged 18 to 32 costs $8.40 a month for a 10-year policy and $9.60 a month for a 20-year policy.

2. “I’m not the breadwinner so I don’t need life insurance.”

While it’s true that it’s critical for the person who provides the majority of the household income to have a life insurance policy, there’s also a value and safety net in having a life insurance policy that covers the spouse and/or children – even if none of them has a job. Why?

If you’re a stay-at-home parent, for example, all of the jobs that you do – providing child care, preparing meals, cleaning, acting as family chauffeur, and the like – have value. If you were to pass away, it would be difficult for the entire family – not only emotionally, but possibly financially, since it might be necessary to pay for someone to take over those duties.

3. “The life insurance coverage I get through my employer is enough.”

Are you sure?

The list of your benefits at a new job may include life insurance. That’s good news. However, it’s also important to know when your coverage begins, the dollar amount of the coverage, and the policy’s duration (time frame).

Have you life insurance how much money your family would need to pay for your final expenses and any outstanding debt, as well as their living expenses, once your income is no longer available?

Even if your employer-provided life insurance policy does “cover it all,” there’s still risk: Your policy is likely contingent upon your employment there. Should layoffs occur in your company and you’re out of a job – poof, you’re no longer covered.

The same scenario applies should you leave one company for a job opportunity at another company that doesn’t offer life insurance benefits.

4. “Term life insurance is better than whole life insurance.”

Not necessarily.

When you look at price tags, term insurance looks better at first glance. You can get a higher death benefit at a lower premium rate, as well as a policy that has an expiration date. However, if your term life policy expires before you do, the next policy that you buy to maintain ongoing coverage might not have as good a value.

There’s also the possibility that when a term life policy expires and you want to buy another, by then you might be considered “uninsurable.”

Whole life Insurance policies last a lifetime as long as premiums are paid, and cover you no matter any changes in your health or medical situation or your occupation or hobbies.

Having that peace of mind is often worth writing a bigger check for the insurance premium.

Whole life insurance, unlike term life insurance, is also designed to build cash value over time, as long as premiums are paid. This means, for example, that if you suddenly need ready cash or are unable to pay for your insurance premium, you could borrow against the policy’s available cash value. Loans taken against insurance policies are subject to interest, although typically at a far lower rate than for credit cards.

5. “I’m too young for life insurance.”

Another myth. No one is too young for life insurance. There are life insurance policies to cover people of all ages, including infants and seniors.

When buying a life insurance policy, generally the younger the person, the lower the premium rate, although a major health issue might bring the cost up. Despite “life expectancy” projections, no one can predict the duration of someone’s life.

A basic question to ask yourself: “If so-and-so family member passed away, what would be the financial impact on the survivors?”

When younger or middle-aged adults die, they often leave behind children who are growing up and outstanding debt for major purchases, such as a home or a car.

A good life insurance policy can help you to plan for such needs as well as help the beneficiaries of your life insurance policy to have fewer out-of-pocket expenses on your behalf.


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