Seven common misconceptions may prevent consumers from purchasing coverage.
COLUMBIA, S.C. (Sept. 3, 2013) — Three in 10 American households have no life insurance at all, and even those with life insurance coverage usually don’t have enough.1 The reason? Besides the fact that most people don’t want to think or talk about needing life insurance in the first place, many simply don’t understand how much coverage they need — or the potentially devastating effects of inadequate coverage.
“Many misconceptions persist about life insurance, including who needs it and how much it costs,” says Steven Johnson, assistant vice president, product development, at Colonial Life. “Learning to spot some of the myths about life insurance can help consumers make better choices that will protect themselves and their families.”
Seven common life insurance myths
Myth #1: My employer pays for my life insurance so I don’t have to worry about it.
Truth: If your employer is paying for your life insurance coverage, it’s almost certainly a group policy that only covers you while you’re employed there. In fact, only 44 percent of adult Americans have individual life insurance.2 Without individual life insurance, you could be vulnerable if you lose your job or have a break in employment. “Individual voluntary life insurance purchased at the workplace is a good solution for many employees,” explains Johnson. “Individual plans are portable, allowing policyholders to keep their coverage if they change jobs or retire.”
Myth #2: I already have enough life insurance.
Truth: A general rule of thumb is to purchase a life insurance policy worth seven to 10 times a person’s income. Yet today, most households only own enough life insurance, on average, to replace their income for 3.5 years.3
Myth #3: I can’t afford life insurance.
Truth: Misunderstanding about cost is one of the biggest barriers to purchasing life insurance, according to LIMRA. Consumers estimated the cost of a life insurance policy to be more than double its actual cost in a 2012 survey.4
“Many types of life insurance are available to meet different needs and budgets,” says Johnson. “Term life plans, which are generally less expensive than other types of permanent life insurance, can be purchased for just a few dollars a pay period. A little life insurance is better than none at all.”
Myth #4: I’m single so I don’t need life insurance.
Truth: Even if no one else depends on their income, single individuals are still likely to leave behind bills, credit card balances and final expenses such as funeral costs. These expenses could become an unnecessary burden on parents or siblings at a difficult time.
Myth #5: My spouse doesn’t work outside of the home, so I don’t need life insurance for him or her.
Truth: Nonworking spouses certainly have a need for life insurance when one considers the many contributions they make to the household, such as child care, laundry, cooking, shopping, cleaning, home maintenance, transportation and errands. Families should ask themselves, “How would I maintain our household if no one was available to take care of these activities?” Adequate life insurance for a nonworking spouse can provide the income needed to protect a family’s way of life.
Myth #6: There’s no need to buy life insurance for my children.
Truth: Children who die prematurely still leave behind final expenses, such as medical bills and funeral costs. And buying and keeping coverage for children while they’re young protects their insurability if they develop a health condition later in life that could make it more expensive or impossible to get coverage.
Myth #7: I’m healthy — I can worry about life insurance when I get older.
Truth: The cost of buying life insurance increases with age. Buying a policy when you’re young and healthy means you’ll already have the coverage you need if you develop a health condition later that could make you uninsurable.
The cost of buying life insurance increases with age. Buying a policy when you’re young and healthy means you’ll already have the coverage you need if you develop a health condition later that could make you uninsurable.
“People don’t like to think about their own death or a family member dying,” says Johnson. “But we also hate to think about leaving our loved ones to deal with financial problems at an already difficult time. Taking time to review your life insurance needs and coverage is one of the smartest things you can do to protect yourself and your family.”
For more information about voluntary group or individual life insurance from Colonial Life, call (803) 678-6599 or visit www.ColonialLife.com. Pre-existing exclusions and limitations will apply. Benefits vary by state and may not be available in all states.
About Colonial Life
Colonial Life & Accident Insurance Company is a market leader in providing financial protection benefits through the workplace, including disability, life, accident, cancer, critical illness and supplemental health insurance. The company’s benefit services and education, innovative enrollment technology and personal service support more than 79,000 businesses and organizations, representing more than 3 million working Americans and their families.