Table of Contents
Table of Contents
Key Takeaways
- Life insurance is affordable and can be tailored to your needs, with average monthly costs ranging from $19 to $23 depending on various factors.1
- Everyone can benefit from life insurance regardless of age or health condition, as it provides financial protection for your beneficiaries in the event of your death.
- Having a health condition doesn't necessarily prevent you from obtaining life insurance, but it may impact your premiums.
- Relying solely on employer-provided life insurance may not offer sufficient coverage, and the policy may not be portable if you change jobs.
- Stay-at-home spouses should also consider having life insurance to help protect their family's financial well-being.
Though many people recognize the financial importance of having a life insurance policy, there are still several misconceptions out there. These common life insurance myths may stop many people from getting a policy that could help provide for their family's financial future.
Myth 1: You Can't Afford Life Insurance
Fact: The cost of life insurance will vary based on your age and health history, but it's most likely possible to find an affordable policy.
For example, the average person pays between $19 and $23 per month, depending on age, sex, health, insurance type and other factors (such as state of residence).1 The annual cost for a 10-year $250,000 term life policy can be as little as a few hundred dollars.
Research indicates that price is the top reason most Americans don't have life insurance, but the majority of Americans also think life insurance costs more than three times its actual average, according to the 2023 Insurance Barometer study by LIMRA.2 You can talk to a financial representative and shop around to get the best policy you can afford.
Myth 2: You Don't Need a Policy if You're Healthy — or if You're Young
Fact: Life insurance can benefit your beneficiaries in the event of your death. And since death is inevitable, everyone — young and old, healthy or not — may benefit from a policy.
The purpose of life insurance is to provide your survivors with a death benefit they can use to help cover expenses such as food, shelter or other costs as they see fit. An appropriate policy and death benefit for you will depend on the needs of your beneficiaries and other factors. Even if you have some money saved, a life insurance policy could help add another layer of financial protection.
Myth 3: You Can't Get Life Insurance if You Have a Health Condition
Fact: This is another pervasive life insurance myth. You may be able to get life insurance if you have a health issue, depending on the provider and health examination results, among other things. But these factors may also impact your premiums if you are granted a policy. For example, a nicotine user might pay close to four times the average nonsmoker's premium
As part of the application process for a policy, insurance companies often conduct a medical exam. This exam typically includes blood work, an assessment of your health history and a few health tests — for example, checking your blood pressure, height, weight and pulse. The results will determine your policy amount and your monthly premium if you qualify, so being as healthy as possible could reduce the amount you pay monthly and increase your chances of getting more coverage at an affordable price.
Myth 4: All You Need Is Life Insurance Through Your Employer
Fact: Employer-provided life insurance is typically group life insurance, meaning it likely won't offer as much coverage as an individual policy. Also, you may not be able to take an employer-sponsored life insurance policy with you if you leave your job, such as in retirement, termination or transition to a new company.
Life insurance through your employer may only provide one to two times your base salary. For example, if you make $50,000 a year, the amount awarded to your beneficiaries might range from $50,000 to $100,000 total. Ask yourself if that amount is enough to cover the income your family would lose if you passed away.
Myth 5: Only Employed Spouses Should Have Life Insurance
Fact: Stay-at-home spouses do a lot of work that would be very costly if our economy put a price tag on it, including cooking, cleaning, financial management and child care.
The death of a stay-at-home spouse can hugely affect a family financially, which is why the stay-at-home spouse may also want to consider having life insurance. A death benefit from a life insurance policy could help fund essential resources for your family after the loss of a loved one.
The Ultimate Benefit of Life Insurance
Life insurance can be a crucial component of your long-term financial planning. It's a good idea to be aware of these life insurance myths and address end-of-life financial implications for your family members sooner rather than later. A life insurance policy could help you plan for your family's financial stability — no matter what the future brings.
Sources
- Average Cost of Life Insurance in January 2024. https://www.moneygeek.com/insurance/life/rates/.
- 2023 Insurance Barometer Study. https://www.limra.com/siteassets/research/research-abstracts/2023/2023-insurance-barometer/2023_insurance-barometer-study.pdf.
