4 Common Life Insurance Myths

Life insurance is an important type of insurance but it's often misunderstood. Unfortunately, falling for common myths could lead to big mistakes that leave loved ones unprotected. 

Here are four misconceptions about coverage that could cause major financial problems for loved ones left with too little in their bank accounts due to an insufficient death benefit after an untimely death. 

1. It's expensive 

Many people are reluctant to buy life insurance because they fear it's too expensive. In reality, though, that's simply not true in most situations. Someone who buys life insurance in their mid-20s can expect to pay around $25 to $50 per month for coverage depending on their gender and how long they want the policy to remain in effect. 

While older people would face higher costs, those expenses usually aren't prohibitive. For example, a 54-year-old man might expect to pay around $181 monthly for a 10-year policy, while a woman of the same age might pay around $131 per month. 

Coming up with this money each month could be well worth it if it saves loved ones from disaster. Giving up just one or two meals out could be enough to cover the cost of this vital protection. 

2. It's not necessary 

Some people also make the mistake of believing life insurance isn't really necessary. This could happen, for example, if someone is a stay-at-home parent and doesn't earn income from traditional sources. It's easy to assume that the parent who isn't making money wouldn't need life insurance, but the reality is that the services they provide are worth a lot and would likely need to be paid for if they wasn't around. 

Others don't believe they need coverage because they don't yet have dependents. But as people age, they often get married, have kids, have parents who age, and eventually they end up with lots of people relying on their income. It can be better to buy coverage at a younger age rather than waiting, even if life insurance doesn't feel necessary at the time. 

Purchasing a policy before it is needed could allow for lower premiums, and could enable consumers to make sure they get covered before they develop a health issue that might disqualify them. 

3. Life insurance through work is good enough 

Some companies offer life insurance as a workplace benefit. Those who take advantage may buy into the myth that this coverage is sufficient. It often isn't. 

The coverage limits may be too low to fully provide for loved ones. Or the coverage could end with a job loss or if an employer stops offering the workplace benefit. If coverage ends after someone is already older or has pre-existing conditions, that person may not be able to get a policy in place to protect those they care about. 

Rather than relying on an employer, most people are better off getting their own life insurance coverage. They can sign up for the workplace insurance as well, and just have extra money for their loved ones if the worst happens. 

4. Buying it is too complicated

Finally, it's a common myth that buying life insurance is complicated. It really doesn't have to be, though. Many insurers offer the chance to get quotes and compare coverage options online. Some insurers have even done away with the required medical exam and use algorithms to assess eligibility and offer quick coverage with a reasonable death benefit. 

No one should buy into these myths, so don't let fear of complexity or cost interfere with putting the protection in place that loved ones deserve.