Term life insurance myths debunked

There are a number of misconceptions about term life insurance and life insurance in general that may cost us. After all, life insurance can be confusing. It is by no means a simple product, and it does not offer simplified one-size-fits-all solutions.

Here are some term life insurance myths that need clearing up.

Myth #1: My life insurance policy at work should be enough. There’s no need to buy more.

It’s not often that one finds an employer-based life insurance coverage to be enough for the family’s needs. (Here are some tips to help you know how much insurance you need.) Usually, the life insurance coverage offered by employers equal once to thrice the employee’s annual salary.

There is also the question of what happens to the policy if you leave the company. Do you get to keep your cover? An individual term life policy is a good umbrella to have, especially if you stand to lose your employer-based coverage at a time when premiums may be higher or it’s too late to get one.

Myth #2: I’m single and fancy-free. I don’t need life insurance coverage.

Even if you don’t have dependents or a family dependent on your income, you may need to have, as a minimum, coverage that will cover medical expenses and cost-of-death (i.e. funeral and burial expenses), as well as personal debts. Otherwise, your estate or loved ones may be the ones who will be faced with these expenses. Also, it’s good to start early in getting your coverage (while you’re in good health and premiums are low) – so that you already have a good foundation by the time you are ready to start a family.

Myth #3: Only the breadwinner needs life insurance coverage.

The Cost of the Primary Caregiver

Based on Legal & General’s Value of a Parent research 2013:

  • The average value of a Mum is more than £31,000 annually.
  • An average mum spends 71 hours a week on household tasks such as childcare, cooking or cleaning.
  • The annual cost of raising a child is £8,580.

In families where one spouse stays at home to care for the family while the other spouse goes out to bring home the bacon, each of these roles are important and come at a cost. The services a stay-at-home mum (or dad, for that matter) provides (i.e. childcare, housekeeping, driving, cooking) carry their own financial value. In the event of the parent-caregiver’s death, the working parent may have to choose to leave work or to hire someone to take over the role of the parent-caregiver.

However, if you are concerned about the family’s current budget, you can either get a joint term life insurance coverage (know more about this option by reading When to buy joint-life term cover) or buy term life insurance at a lower Sum insured for the stay-at-home parent.

Myth #4: Life insurance is an expensive, unnecessary expense.

Yes, life insurance comes at a cost. But the cost of leaving your family without your income and without the means to survive will be more costly, don’t you think? You may be surprised by how affordable term life insurance is. As medical innovations improve (and with it, life expectancies), premiums for term life insurance has been at a decline.

Myth #5: All insurance products are the same.

Although it can be confusing, life insurance is just one of the products that you should include in your protection strategy. Life insurance protects your family from the financial loss of your dying. There are other products that you may want to include, depending on your situation:

Myth #6: You have to go through hoops just to buy life insurance.

With our website you can buy term life insurance in the comfort of your own how. Here’s how: Buying term life policy online.

Myth #7: Investing my “premium money” would be better than spending it on term life insurance.

This will be true if your assets exceed your debt. However, if you have a mortgage for your home, a mortgage for your car and credit card debts, a life insurance coverage should be in place. This will give your family the means to meet their daily household needs since your current assets will not be enough.

Myth #8: Term life insurance is the only way to go.

Term life insurance is an excellent, cost-effective solution. However, it is best for those who are young and healthy. As the years progress (and your age increased and your health declines), the premiums for term life insurance (which only provides cover for a specified period) will be prohibitive. It is best to look into your specific situation to know which product (or combination of products) you need.

Know more:

Myth #9: If you have a pre-existing illness, you cannot get life insurance.

You don’t have to lose hope. You still can. However, you should be prepared for the fact that premium ratings may be tacked on to the standard premiums. Living a healthy lifestyle, complying with the doctor’s orders, a lessening of the severity of the illness are some positive factors that underwriting can look into when evaluating your application.

Myth #10: As long as I’m healthy, my lifestyle does not make an impact on my premiums.

Your lifestyle will directly affect how much you will be paying. During the underwriting process, the insurance company will also take your lifestyle into consideration. This includes health habits (nicotine and alcohol consumption) and hobbies (if there are any dangerous hobbies you have).

To secure your family's future, fill in the form on the right and get your term life insurance quote now.

Types of insurance:
Term life insurance 101:
Life insurers:
*Scottish Provident 2012 life cover claims paid report.