Think you know everything about life insurance? Then you might need to think again. There are many life insurance myths in the United States, and it's time to put them all to bed. So read on because we're in a myth-busting mood with this guide to debunking the misconceptions about life insurance.
Life insurance is only for when you die
Yes, life insurance coverage offers a death benefit to your loved one when you pass away, and that's great! But it's so much more when you get a permanent policy, which lets you build wealth completely tax-free. Oh, and did we mention the wealth-building component happens when you're alive, and you can access the cash while still breathing that sweet, sweet air? You know what that means, right? Life insurance suddenly becomes a good investment. More below.
It’s not a good investment
With a permanent policy, you get to build wealth with something called "cash value." Using the cash-value element of your permanent life insurance coverage, you can grow your money over time. It works by paying into two pots for your premium: the death benefit and cash value. Both of these accrue with each monthly payment, growing to the point where you have a significant death benefit and build a nice little nest egg. You can then use that money in retirement to do pretty much whatever you want, from paying for the kid's college to buying that Porsche you've always had your eyes on.
It’s expensive
Life insurance has a reputation for being quite expensive. It probably doesn’t cost as much as you think, however. You can get policies for less than $100 per month, but even when it is on the high end, there’s the investment aspect to consider. For example, a permanent policy is more expensive than term coverage, but the premiums never increase. That means you pay the same amount throughout the entire policy with the same payments each month. And if you lock yourself in nice and early in age, you’ll get the cheapest premiums available throughout your whole life.
Life insurance is for older people
That brings us nicely onto our next life insurance myth: age. Most people think life insurance is something you get in your older years when you’ve got a mortgage and kids. And while it’s definitely worth considering at that stage of your life, you can also get it during your younger years. Again, premiums are cheaper for younger people, who tend to be in their best shape health-wise. Plus, you’ll grow the cash value from an early age and will have more to tap into later in life. Money goals 101, if you ask us.
But you also can’t get covered if you’re too old
You shouldn’t get life insurance if you’re too young but also can’t get it if you’re too old–just another weird life insurance myth. *Mind explodes*. The truth is that you can get life insurance at pretty much any age, whether you’re a new grad or a senior citizen. Premiums will likely be a little higher if you’re retired, but a life insurance policy can help with aspects like long-term care, clearing debts, or even saving a little for your retirement if you’re in your 60s. Expectancy life rates have doubled in America over the last 160 years, which means an increasing number of people are getting life insurance coverage as seniors.
You can’t get life insurance with a pre-existing condition
Most people think that it's game over when it comes to getting life insurance with a pre-existing condition. That doesn't need to be the case, however. In fact, many people can still get coverage even if they have a medical condition. Your premiums may be higher, but you can still get insured. The provider will factor in things like the length of time since your diagnosis, risk of complications, and age and lifestyle. It's best to speak to insurers and see if you qualify with a pre-existing medical issue. But it's by no means a foregone conclusion that you won't get coverage.
Your work-life insurance policy is enough
Many places of employment offer group life insurance to their employees. You typically don't need a medical exam, and it's a perk of the job, so there's nothing to pay. This is all great, but group life insurance doesn't tend to cover all the bases, and you should still explore getting individual coverage. Group life insurance is typically capped at $50,000 or a percentage of your income, you can only use the employer's preferred insurance company, and you'll lose coverage if you move jobs. So while group life insurance is nice to have, it's probably not going to cut it by itself.
In conclusion: Debunking life insurance myths
After reading this guide, we hope you have a clearer picture of life insurance and that any misconceptions have been laid to rest. Getting a permanent life insurance policy is a great way to protect your family and build for your future while you're still alive. There are no myths about that. Just a great investment that looks after you in both life and death.