6 misconceptions about life insurance that aren’t true

insurance
insurance

The subject of life insurance is inevitably a confusing one. According to a recent survey by the Association of British Insurers, about 54% of UK adults don’t have any type of life insurance policy. 

When asked why they have not taken out a life insurance cover, the responses vary, but some 18% of the respondents say they don’t understand how life insurance policies work. 

So, maybe it’s time we clear the myths to help you go about securing the right type and amount of coverage. Read on to learn more. 

You don’t need life insurance; you’re still young

The most common myth regarding life insurance is that you don’t need life insurance until you’re much older. The truth is, no one knows what’s around the corner.

Even if you’re young and in peak fitness, anything can happen unexpectedly, so it’s imperative to consider getting a life policy as soon as possible.

After all, life insurance premiums are cheaper when you’re young and healthy because insurers perceive you as less risky. That means you could lock in much lower premiums if you take a cover now – or at some point before your next birthday.

You have a group life policy; that’s enough

Life insurance through an employer is a nice perk. Depending on your employer’s terms, the pay-out can be two to four times your annual salary, which is generous. 

But before you get content with your death-in-service benefit, think about your circumstances first. Will your death-in-service benefit offer enough safety net for your family if you pass away? If yes, what if you switch jobs? 

Remember that group life plans are not mobile, and you stand to lose your cover if you quit working for the company. So instead of running these risks, why not secure an extra layer of life insurance coverage?

Life insurance will only pay if you pass away

Whilst it’s true that life policies are designed to pay out a lump sum when a policyholder passes away, some policies go beyond that. Think about policies that include terminal illness cover, for example.

Terminal illness cover pays out a benefit if you’re diagnosed with a terminal illness. And some insurers don’t even charge extra for this benefit. 

Critical illness cover is another type of protection you might want to consider. This type of policy pays out a lump sum if you’re diagnosed with a critical illness, thus reducing your financial concerns as you focus on recuperating. 

You must take a medical exam during the application

While this is true for some life plans, candidates are not always required to take a medical examination during the application process. Even so, the insurer may ask you a series of health and lifestyle questions before offering you cover such as non-medical life insurance.

These questions help the insurer better understand your overall health and wellbeing. That way, they can tailor the coverage to fit your needs. 

Insurers rarely request that applicants undergo a medical examination for other policy types. But if you show any signs of severe ill health or pre-existing conditions, insurers have the right to request that you take a medical exam.

Life insurance is expensive; few can afford it

If someone tells you that life insurance is too expensive, they’re basing the cost more on perception than reality. Taking out affordable life insurance is possible. 

Life insurance premium cost will greatly vary depending on several factors, such as: 

* Age 

* Medical history

* Smoking status

* Weight/BMI

* Policy length (the term)

* Cover amount (sum assured)

Some forms of life insurance cost as low as a few pounds a month in premium. Comparing quotes from several insurers is a great way to secure the lowest possible premiums that match your budget. 

Only the primary breadwinner should get life insurance

You don’t need to be the primary breadwinner in your household to take out Term Life Insurance or Whole of Life Insurance. 

Think about the devastating financial impact your family could face if you were to pass away unexpectedly. The financial burden might range from unpaid debts, such as student loans, to expensive funeral costs and more. 

With this in mind, it’s advisable to secure a life insurance policy even if you are not the primary earner in your family. Doing so provides financial security for your family, meaning they won’t have to struggle to keep up with debt repayments should you pass away.

Takeaway

Navigating the life insurance industry jargon can be an uphill task, but it doesn’t have to be that way. Once you can separate facts from myths, you should be able to select a cost-effective life insurance policy that best fits your needs and budget.

So don’t let other people’s opinions discourage you from getting the appropriate coverage for you and your loved ones!