Addressing the 5 Misconceptions Around Life Insurance – InsuranceNewsNet


Having life insurance provides peace of mind and can help people feel financially secure. However, according to research by LIMRA41% of Americans say they do not have enough life insurance coverage and at least 106 million Americans live with a life insurance deficit.

Nathan Richardson

Here are some misconceptions we hear about life insurance and how to discuss them with your clients to help them make informed decisions about their financial future.

Myth #1: Life insurance isn’t necessary if I’m young, healthy, and single with no dependents.

Reality: When you’re young, it’s the best time to buy life insurance.

Life insurance is often seen as necessary only by those who have a family, home, or other financial obligations. But those who don’t fit this bill can still qualify for life insurance. Life insurance can help pay off debts or pay off student loans and funeral expenses.

Also, being young and in good health when you take out a life insurance policy allows you to benefit from lower premiums. It may not be easy to predict the need for life insurance throughout life, but the sooner you buy life insurance, the less it will cost you.

Myth #2: Life insurance is expensive.

Reality: Life insurance is the easiest and most affordable way to provide security and peace of mind.

Many people overestimate the cost of life insurance and therefore do not buy it. The cost of a policy depends on factors such as age, medical condition, type of policy and amount of coverage. But it can be as affordable as $170 a year (about $14 a month) for a healthy 30-year-old to get term life insurance, according to LIMRA. Insurance Barometer 2022.

Myth #3: Life insurance only benefits my loved ones after I die.

Reality: Life insurance has more uses than just death benefits.

Consumers recognize that life insurance is a way to support loved ones financially after the death of the insured person. It is less known that policyholders can use their life insurance during their lifetime.

A living benefits rider allows you to access insurance policy funds while they are still alive, under certain conditions. If you are certified as suffering from a permanent chronic condition, the rider may pay you a lump sum or a monthly payment deducted from your total death benefit.

You can also access the cash value accumulated through a permanent life insurance policy by withdrawing and borrowing from the cash value of the policy, as needed, within certain accessibility options.

Myth #4: Life insurance isn’t necessary after you retire.

Reality: Retirees can benefit greatly from life insurance.

By the time you retire, your life insurance needs while you were working may no longer be relevant. Your children may have grown up, you may have finished paying off your mortgage, etc. Retirees can still use life insurance in a variety of ways, including to cover unpaid debts and medical bills, create an inheritance, replace retirement income, and pay for final expenses.

As mentioned earlier, cash value accumulation through permanent life insurance policies is also available in retirement, which can supplement your retirement income or offset various expenses.

Myth #5: The life insurance I get through my job is enough.

Reality: Most employer-sponsored plans do not offer full coverage.

More than 100 million Americans have an employer-sponsored life insurance plan, which is usually very affordable or even free. However, most plans do not provide full coverage to meet financial needs. Even if your company offers a life insurance package that matches your salary, many people use 10 times their annual salary as a minimum rule of thumb for their policy.

Additionally, most employer-sponsored plans are not “portable,” so employees lose coverage if they change jobs or retire.

Life insurance is more relevant and accessible than consumers believe. It’s about educating your customers to help them understand the benefits it brings to lead them into a financially secure future.

Nathan Richardson is Senior Vice President, Consumer Division, CNO Financial Group. He can be contacted at [email protected].

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