WASHINGTON, May 19, 2013 – Life insurance is one industry that seems to be surrounded in so much misinformation that half of an agent’s job is to reteach his or her clients everything they thought they knew about insurance. The rumor mill may be one of the strongest reasons why so many people are uninsured or underinsured. They believe fallacies commonly promoted as truths and either choose to ignore insurance, or go about buying it in the wrong way, ending up with a policy that doesn’t suit their needs. Below are some of the most common misconceptions that an agent hears nearly every day.
Life Insurance is Too Expensive
Studies have shown that people overestimate the cost of life insurance by as much as three times the actual cost. They come to think that life insurance is a luxury item that costs thousands of dollars a year and that it’s inaccessible to most people. This couldn’t be farther from the truth. For a decent term life policy for an average man in his 30s, the tab would run around $20-$50 a month. This is well within the grasp of many families, and the cost might even be lower.
Everyone Needs Life Insurance OR Nobody Needs It
These two conflicting stances show up all the time. Either someone thinks that they need life insurance no matter what, or they think that it is a waste of money and nobody should be getting it. Both these opinions are wrong. The truth of the matter is that the need for life insurance should always be decided on an individual basis. The single bachelor in his 50s probably doesn’t need it, while his married neighbor with three kids can’t risk not having it. The determining factor in every case is the individual’s dependents. How much would they be affected by the potential policyholder’s death? That determines how much coverage is needed, or if it’s needed at all.
Whole Life Insurance is an Investment Vehicle
Since many agents push expensive whole life policies, many people think that life insurance is an investment vehicle, a savings deposit of sorts that will either benefit your family or can potentially provide you with a return of your premiums if you live long enough into the policy. What these agents don’t tell you is that a term life insurance policy has much lower premium payments and those savings can go towards a better investment portfolio
My Work Offers Enough Coverage
A benefit that many employers offer is life and health insurance through a group policy and many people that have these policies think that life insurance from here is just as good as what they’ll find elsewhere. The truth is that group policies rarely have coverage anywhere close to an individual policy and are often very limiting in their benefits. Plus, if you leave your company, you lose the policy. Life insurance offered by an employer can be great as a supplemental policy to go along with an individual policy, but most people will be underinsured if they only have employer based life insurance.
“I can’t pass a medical exam.”
This excuse stops people from even trying to get life insurance. Yes, many policies and companies do require a medical exam, but there are plenty that don’t and every company is different. So even if you were denied once that doesn’t mean you can’t try again. If you’ve been turned down due to a medical exam before, it’s important to work with a high risk life insurance expert who can help you to shop around and find a company that can work with you.
These are only some of the most common myths and misconceptions that life insurance agents deal with every day. If you have question about your own thoughts on life insurance, or would like more explanation on the information above, please leave a comment below or contact me directly with the “ask me a question” button located underneath my headshot.
Liran Hirschkorn is an independent agent representing the best life insurance companies through his company, ChooseTerm. He also specializes in high risk life insurance; helping previously declined applicants get coverage. He started the column, Rest Insured, because he is trying to make life insurance a more accessible topic to everyday Americans rather than something that is avoided.