There are some things in life you pay for that may not give back as much as you put in. If you pay monthly for a gym membership, for example, but only go a handful of times a year, that’s not really a good investment. On the other hand, there are some payments you make that genuinely make a world of difference, and for many, that includes life insurance.
The problem is that there are far too many myths surrounding life insurance and what it actually entails, and in some circumstances, those myths may even turn people away from financially protecting their families. This guide aims to debunk the most common myths, such as:
- insurance companies not paying out
- needing medical examinations
- life insurance impacting credit score
So, if you’re ready to know the full truth about life insurance, keep on reading.
Myth #1: Insurance Companies Don’t Pay Out
Some people worry that, even after paying monthly to a life insurance company, the payout won’t happen. Good news: this is a complete myth. While there are some cases of denied claims, this is typically only because the policy terms were not met. For example, if a person does not disclose accurate information. The reality is that the payout rate is 96.7% (as of stats released for 2024), so this isn’t something you need to worry about.
If you want peace of mind, it’s important to check out several different life insurance companies. That way, you can choose the best one for you and your dependents. You can do so at Reassured.co.uk, where you will receive several life cover quotes. Make sure you pick one that has terms you can stick to, as well as one that assesses your unique financial situation and ensures your dependents are well taken care of upon your death.
Myth #2: Life Insurance Is for Breadwinners Only – Not Their Partners
It makes sense for the breadwinner in the family to get life cover. The myth here is that it should only be the breadwinner who seeks life insurance. Non-breadwinning partners may not earn as much, but they likely still contribute to the household, whether that involves covering domestic chores or bringing in their own income. In the event of their death, life insurance provides a financial safety net to cover all of that.
Myth #3: You Can Only Get Good Life Insurance Cover While You’re Still Young
There’s a misconception that you must be young in order to get a good deal on life insurance, but that isn’t true, as there are many life insurance policies in which over 50s can benefit, securing their family’s future financial security. There are plenty of great policies to choose from, which means you won’t have to overpay for cover, even in your later years’.
Myth #4: Life Insurance Is Only for the Wealthy
Some people assume that life insurance is a luxury only afforded to the wealthy. After all, life insurance is not essential and is an extra payment that must be made each month.
However, life cover benefits both high and low earning families. Paying a premium each month can mean that the rest of the family receives funds to cover essential living costs. In a time of grief, it provides stability.
Myth #5: You Don’t Need Life Insurance If You’re Fit and Healthy
Death isn’t always predictable. People may think that life insurance is only necessary when you are sick, but that’s definitely not the case – it’s a way of financially protecting the people you leave behind. In fact, you will find better coverage if you seek out life insurance when you are healthy.
Myth #6: Life Insurance Always Requires Health Check-Ups
Every life insurance plan is slightly different, which is why seeking several quotes is such a good idea. The truth is that not every life insurance plan expects health check-ups, with some not requiring any at all. Generally, a medical exam is only used in specific situations that require it, such as when applying for a high amount of cover. Some guaranteed plans will never ask for a medical examination.
Myth #7: Getting Life Insurance Impacts Your Credit Score
Some people worry that applying for life insurance impacts their credit score, but that simply is not the case. While life insurance companies may check your credit rating, this is only done as a soft search, which does not have any effect on your score. After all, a life insurance plan is not a loan.
Myth #8: There are Limits on What Beneficiaries Can Spend Life Insurance On
When it comes to life insurance payouts, there are no limits on what the beneficiaries can spend the money on. Of course, there are some common expenses the beneficiaries may spend the payout on, such as funeral costs and bills, but there is no set rule to say that it must be spent on those things. The payout is for the dependents to spend the money however they choose – in a time of grief, the money comes in very handy.
Life Insurance Myths: In Summary
When it comes to life insurance, there are many myths circulating. You might hear about some of the myths through word of mouth, or you may stumble across them online. It’s important to fully understand what life cover entails, as it’s a type of financial coverage that can ensure your family receives a financial safety net when you pass away.
