Did you know that 44% of Canadians and their families are not protected with valuable life insurance? Why? Good question! There are so many myths and misconceptions when it comes to purchasing life insurance that we thought it was about time those ideas got busted!
The top reasons why people don’t get life insurance:
Myth 1: Life insurance is too expensive
Busted! This one is a bit like asking how much a cup of coffee costs. You can grab a Timmy’s…or a fancy half caf/decaf somethingccino and the price will be very different! Same with life insurance. Coverages vary depending on, for example:
- Your age and general health
- The face amount of the policy
- The length of the coverage (term vs universal life)
- Whether you want an investment component with your life insurance
- Any additional coverages, or riders, you want to add to your basic coverage
Speaking with a financial advisor can help you understand the options available within your specific budget, whatever that budget may be.
Myth 2: Life insurance is only useful after death
Busted! That is simply not true. Structured properly, an insurance policy can help you while you are still alive and provide financial support and security for loved ones after you’re gone.
- While you are alive
- The savings component of a universal life policy allows for tax-deferred investment growth that can be used in many ways while you are still alive, such as adding to your retirement income, or helping to cover the costs associated with a disability.
- After you’re gone
- The death benefit received by your beneficiaries can be used to help pay debts, cover funeral costs, and take care of final expenses.
- Your insurance policy death benefit can also be used as income replacement for surviving family members and dependents.
Myth 3: The group insurance from my company is enough
Busted! While having insurance coverage from your employer is a great start, and certainly better than nothing, it may not be enough protection for your needs. Most employee-offered life insurance only provides for 1 or 2 times your annual salary to your beneficiaries. Funeral costs, final expenses and any outstanding debt could use up this amount…and more, leaving nothing for your beneficiaries in terms of income replacement or financial support after you’re gone.
When it comes to insurance provided by your employer you should also consider that if you leave that place of employment, in most cases the coverage will stop. Plus, you have to remember that you don’t control the policy so changes may be made that affect you but over which you have no control.
Myth 4: Insurance isn’t necessary because I am young and healthy
Busted! It may be counter-intuitive, but when you are young and healthy it is actually the best time to get life insurance! Because life insurance premiums are determined by a variety of factors, including health, your premiums are likely to be much lower than if you wait until you are older with a greater potential for developing age-related health issues.
Myth 5: I am not eligible because I have a pre-existing condition, or I am a smoker
Busted! Having a pre-existing condition does not mean that you are not eligible for life insurance. It may mean that you may pay a slightly higher premium if the medical condition is controlled with medication. When it comes to lifestyle choices that may affect your life insurance status, such as smoking, you will pay a higher premium while you are a smoker, but you may be able to have your premiums reduced if you are able to prove that you are smoke-free for a specific amount of time. Talk to your financial advisor can provide you with more information.
So, there you have it – five myths about purchasing life insurance…BUSTED! Talk to a financial advisor about your life insurance options today.
- Life insurance