Learn the truth behind life insurance. Discover if you should consider a life insurance policy, how long it takes to get a life insurance policy and more.
Whether you have a life insurance policy or you don't, there's a lot of confusion out there surrounding life insurance. A 2018 study of 1,000 American adults by LendEDU found while 54% of respondents had a life insurance policy, 33% of those who did said they didn't fully understand how their policy works. 1
To give you a clearer picture of life insurance and the benefits it can provide, here are seven life insurance myths and the truth behind them.
1. Life Insurance Costs Are Too Expensive
A 2017 study by the Life Insurance Market Research Association found people estimated life insurance policies by more than three times the actual cost. 2 Life insurance costs depend on a number of factors, including the term of the policy, the age and health of the policyholder, and the coverage the policyholder gets. There is affordable life insurance for many budgets.
Some policies cost as little as around $135 a year, or barely $12 a month, all while providing the peace of mind that if something was to happen to the policyholder, their family and dependents would be covered. Look into getting a policy earlier rather than later to possibly secure a lower rate.
2. My Company-Provided Employee Life Insurance Is Enough
If you can get a life insurance policy through your employer, that's a great group life insurance policy option to start with. But coverage through an employer alone poses risks for the policyholder. If you lose or quit your job, you may also lose your life insurance. At that point, you'll have to apply for a new policy, which may be far more expensive than if you opted into a personal policy now.
Also, your employer life insurance policy may not provide all the coverage you need. In some cases, you may be overpaying for a life insurance policy through work. You may be able to get a less expensive life insurance policy by looking into an individual plan. Another benefit of an individual policy is that it can be tailored to your needs, helping to ensure you have the coverage amount you intend for your family.
3. I'm Too Young/Too Old for Life Insurance
Let's start with the “too young” myth. Again, if you do plan on starting a family some day, you can get life insurance when you're young and you could lock in your lowest rate possible. Even if you don't plan on getting married or having children at this moment, plans can change at any time. There may also be situations where you become a caretaker for a family member, and having life insurance provides needed protection for your loved one.
You may not be too old for life insurance. Life insurance products like Guaranteed Issue Whole Life Insurance provide coverage for people age 50 - 85 years old and no matter your current health status. A Guaranteed Issue Whole Life Insurance plan is designed to cover expenses like credit card debt, funeral costs and medical bills, so your family is protected from future financial burdens.
4. Only Breadwinners Need Life Insurance
If you're married with children, and you are responsible for familial duties, your loss would no doubt impact your family. A breadwinner who loses a spouse who is the primary caregiver or a stay-at-home parent may have to compensate for that loss financially, by hiring a childcare provider or a housekeeper. The surviving breadwinner may still be significantly impacted by the loss of a partner. Life insurance for both spouses provides protection and peace of mind now, no matter how circumstances may change.
There may be a chance that the role of breadwinner may change in the future, as well. For example, if the breadwinner becomes disabled and can no longer work, or if the current breadwinner decides to become a stay-at-home parent, financial circumstances may change. Locking in life insurance at a lower rate now can protect a family.
5. I Have Health Issues, So I Won't Qualify for Life Insurance
While it's true health issues may impact the type of life insurance term you qualify for, you may have life insurance options no matter what type of health issues you have. Again, guaranteed issue whole life insurance is one type of life insurance that does not require answering health questions or taking a medical exam.
Accidental Death and Dismemberment Insurance (AD&D Insurance) is another type of insurance that does not require a medical exam. It offers protection if you get seriously injured or killed in a covered accident. With AD&D insurance, you're guaranteed approval if you meet the requirements.
You may be worried that you're too overweight to qualify for life insurance. Your physical health and mental health are indeed considered in determining what rate you'll pay for your policy. This includes how much you weigh.
Obesity, or your body mass index (BMI), can cause a number of health conditions and overall poor health, but many people can still qualify for a policy. It all starts with a conversation with our agents, who can advise you on the best coverage for your individual situation. Many times, they'll recommend going through with your application, opting to review your policy later if you lose weight. That way, you're covered even while you pursue better health.
Another health issue to consider is smoking. Smoking can be a factor in determining your rate class. However, it is rarely the standalone cause that someone would be denied life insurance. That being said, a non-smoker of the same age will commonly be given a better rate, so if you know you need a life insurance policy, quitting smoking permanently could help decrease your premiums.
6. I Don't Have Kids, So I Don't Need Life Insurance
Whether you're married without kids, or you're single and don't have kids, you can still benefit from life insurance. Here are some examples. If you were to pass away unexpectedly, your spouse or family could be left having to cover certain debts, like student loans. There are also funeral costs and final expenses to take care of.
Regardless of your age, if you have assets or loved ones to protect, life insurance should be a significant consideration. It can help cover any outstanding debt or financial commitments you have. And again, getting a policy now rather than later can help you get a lower rate. Policy rates may increase as your age does. Since you are never going to be as young as you are today, it is arguably the best time to apply for life insurance.
7. Getting Life Insurance Will Be an Overwhelming Process
Applying for life insurance can seem overwhelming, which can cause some people to put it off. But the truth is, you can apply for life insurance over the phone, and it will only take around 15 minutes to apply.
Typically, the entire application process takes about two to three months to complete when a medical examination is required. If you're applying for a life insurance policy that doesn't require a medical examination, you may be able to get approval within as little as 24 hours.
Apply for Life Insurance Today
Don't delay. Your family could benefit from a life insurance policy at any time. Starting the process now can give you and your family peace of mind. You won't have to worry about applying in the future, and you'll know you have the coverage you need now. Get started by trying our free life insurance calculator tool. Contact AIG Direct for information on a life insurance policy that will work for you.
This information is general in nature, may be subject to change, and does not constitute legal, tax or accounting advice from any company, its employees, financial professionals or other representatives. Applicable laws and regulations are complex and subject to change. For advice concerning your individual circumstances, consult an attorney, financial/tax advisor or accountant.