17 June 2014 0 Comments

Misconceptions About Life Insurance

shutterstock_176673806There are many misconceptions people have about life insurance.  It’s no wonder; policies can be confusing to the layman and occasionally insurance agents add to that confusion by injecting opinions primarily supported by their desire to make a sale.  But, we all have opinions, so some of mine will be included in my comments.  For the most part, however, the misconceptions I reveal will be debunked with facts.
I can get a lower premium by dealing directly with the insurance company, bypassing an agent.

This is not true; in fact you might get a higher premium.  A single insurance company is never going to have the best premiums for all policy types, ages and medical histories.  An agent can shop for the best premium for you with several companies.  Plus, the insurance company who deals with you directly has a fixed cost of employees who deal with you as opposed to the variable cost of only paying an agent a commission only when a sale is consummated.  A good agent saves you premium dollars!

I can buy a policy without having to take a medical exam, so why go through that long, drawn out process?

If you are in very poor health it might be possible that the best policy and lowest premium will be with an insurance company that does not require a medical exam and asks very few questions about your health.  But, the policies available requiring minimal information about your health  normally carry a high premium and often have a limited death benefit for the first two to three policy years.  The vast majority of people will have more policy options and get a better premium if they go through the full underwriting process, including a medical exam.

Everyone needs some life insurance, at least enough to pay off debts and cover final expenses.

This is not true.  If you have no one who is dependent on you as a breadwinner or are not a caregiver for family members, life insurance is not necessarily needed.  In fact, final expense policies sold to many seniors to cover the cost of funerals are very high priced and often discontinued by the cash strapped senior prior to death, making them an absolutely lousy deal!  In these situations you’re better off setting up a savings fund to cover emergencies while you are still alive, with the balance available for final expenses at your death.

I’m young, healthy and don’t have a family yet, so there is no need for me to buy life insurance.

If your plans are to someday have a family, there is a reason for you to consider life insurance now.  Since you are healthy today and you can’t guarantee what your health will be like when you begin your family, purchasing life insurance today will guarantee your insurability.  Convertible term insurance gives you low cost coverage today and an absolute right to obtain a permanent policy in the future based on your medical condition today.

Coming up…debunking more misconceptions about life insurance.

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