Myth 1: Insurers won’t pay out if you’ve had a COVID-19 vaccine
The COVID-19 vaccine does not impact an insurer’s decision to pay out claims, as confirmed by the American Council of Life Insurers in March 2021. In addition, the vaccine is typically not used to determine your eligibility for coverage. In fact, it may open up coverage for those with underlying health conditions, as the vaccine reduces the risk of dying from COVID-19.
Concerns over whether life insurance covers deaths from COVID-19 are also largely unfounded. In most cases, life insurance policies cover infectious diseases, such as COVID-19.
Myth 2: Life insurance is expensive
One of the biggest myths about life insurance is that it comes with a hefty price tag. Over half of Americans overestimate the cost of term life insurance by three times its actual cost, according to the 2020 Insurance Barometer Study from marketing and research firm LIMRA and life insurance-focused nonprofit Life Happens.
In reality, premiums can be relatively low, especially for younger generations. “Their costs are going to be minimal, something very similar to maybe their Netflix subscription,” says Faisa Stafford, president and CEO of Life Happens.
Myth 3: You don’t need life insurance if you’re young and healthy
Although your mortality may not be top of mind when you’re young, getting coverage early can help you lock in low rates. This can be useful, as the price of a policy can go up as you age.
The “cost of insurance on younger, healthy individuals is super inexpensive,” says Ebony Ruffin, founder of Ruffin Consulting Services, a financial planning firm with a focus on life insurance. It’s perhaps not surprising that 40% of people wished they’d purchased life insurance when they were younger, according to the 2020 Insurance Barometer Study.
Myth 4: If you have health issues, you can’t get it
Although insurers typically use your health to calculate rates and coverage amounts, it doesn't mean you can’t get life insurance with a pre-existing condition. In fact, some policies are built specifically for certain health conditions like diabetes or cancer, Stafford says.
You can skip the medical exam altogether with simplified issue life insurance. These types of policies require only a short health questionnaire. If you don’t want your medical history to be a factor at all, consider guaranteed issue life insurance. Acceptance is guaranteed regardless of your health, as long as you’re within the eligible age range, typically 40 to 85.
Myth 5: If you’re single and have no dependents, you don’t need it
Life insurance isn’t just for breadwinners. For example, if a parent or guardian co-signed on your student loan, a new car or your first mortgage, life insurance can help protect the co-signer from taking on the debt if you die, Stafford says.
You can also leave the death benefit to someone who doesn't rely on you financially, like a niece or nephew, Stafford says. Similarly, if you support a charity or nonprofit, you can assign some or all of the death benefit to the organization.
Myth 6: Life insurance through your employer is sufficient
Group life insurance through an employer is typically one or two times your salary, which may not be enough to support your loved ones. “You probably need at least 10 times your salary,” Stafford says.
Another thing to consider is portability. Free policies through work are often tied to employment, so if you leave your job, you may lose your coverage. Buying individual life insurance means you’re covered regardless of where you work.
