Life insurance remains as crucial as ever in creating generational wealth. However, many people — particularly young people — are still daunted by purchasing a policy due to myths that persist about life insurance affordability, eligibility, and more.
In their annual Life Happens study, LIMRA reported that 44% of families in 2022 would face financial hardship in only six months if a wage earner died unexpectedly. The right policy could protect every one of these families from this hardship — the industry still has a lot of awareness to spread if the goal is financial security for all people.
Every September, First Financial Security, Inc. takes part in Life Insurance Awareness Month by sharing blog posts and social media images to promote the necessity of life insurance to the public. Our theme for LIAM this year is "Myths About Life Insurance," which focuses on dispelling common misconceptions that prevent people from seeking coverage.
Arm yourself with the facts this year by sharing the following with your network:
Dispel These Myths About Life Insurance
"Life insurance is only for adults of a certain age."
You are never too old — or too young — for life insurance. Costs will differ according to age and health status, but there is a policy out there for everyone.
"I don't need life insurance because I have no children."
Even if you have no children, you will still leave loved ones behind. Life insurance can save your beloved from debts like your mortgages or student loans and cover your final expenses and burial costs.
"My beneficiaries will have to pay income taxes on the proceeds of my life insurance policy."
While interest payments on your policy may be taxed, general life insurance benefits are income tax–free up to a certain threshold set by the Internal Revenue Service (IRS).
"I can't convert my term life policy to a permanent or whole life policy."
Some term life insurance policies can actually be converted to permanent policies depending on the individual contract. If you want to see if your policy has conversion privileges, be sure to ask your agent before purchasing.
"I no longer need life insurance because my children are adults."
Even if your adult children can afford your final expenses, a policy still has many advantages — it can save them from potential estate taxes by the government or shield them from your outstanding debts. Legacies are built through life insurance.
"I have so much in savings that I don't need life insurance."
Most savings are for retirement — and the truth of the matter is, nobody knows how long retirement will last. Life insurance is a way to guarantee financial protection for your family once you're gone.
"I cannot afford life insurance."
Life insurance is much more affordable than most people assume. Many would be surprised to learn that a healthy 30-year-old can qualify for a $250,000 20-year level term policy for just $13 a month.
"I draw no income; therefore, I don't need life insurance."
Stay-at-home parents still provide services that would cost a significant amount of money to replace. From child care to cooking meals to daily transportation, life insurance cash benefits can protect your loved ones from the burden of paying the costs you leave behind.
"Stay-at-home parents still provide services that would cost a significant amount of money to replace."
“People with health issues cannot get life insurance."
Health is a factor for calculating premiums and coverage amounts, but it is not an excluding factor for anyone who needs life insurance. There is a policy for everyone, including some built explicitly for customers with health issues.
"I don't need life insurance for my student loans because they're forgiven upon death."
Only federal student loan debt is certain to be forgiven upon death or total disability, which means if a private company holds your student loans, your family might be responsible for it if you die. Life insurance can protect your family from financial burdens no matter what.
"I don't need life insurance."
Life insurance is essential for everyone. Protecting your loved ones from undue financial burden during a difficult time is one of the most critical parts of a healthy financial plan. The right policy is out there for you.
"Health is a factor for calculating premiums and coverage amounts, but it is not an excluding factor for getting a life insurance policy."
"Getting life insurance coverage is a long and complicated process."
Automated underwriting has revolutionized the industry recently, with almost 90% of life insurers offering or planning to offer this simplified process. Getting coverage is easier and more important than ever.
"There is no way to use my life insurance benefits while I'm still alive."
Life insurance has become more innovative over the years, and many products feature living benefits to cover costs while you are still alive. You can use this money for anything, from housing needs to medical bills.
While this lack of knowledge about life insurance has long been the norm, there is hope that it is dwindling. More and more people are learning about the importance of coverage every day, and life insurance companies are doing their part to meet this need. The future is bright, but we all must do our part to battle misinformation.
Life insurance can be difficult to discuss because it involves facing death, but having that difficult conversation is worth it to give your family the financial security and peace of mind necessary to enjoy all that life has to offer. Fight the myths about life insurance this year for Life Insurance Awareness Month — find yourself the perfect policy to protect your legacy and discuss the importance of coverage with your loved ones.