Myths & Facts: Life Insurance Explained
Life insurance offers peace of mind for many and for those who are thinking of getting a policy there are often a number of questions that arise.
With many different types of policies, packages and providers there are a number of myths about the benefits of buying a life insurance policy. The Fintuity team have listed the top myths surrounding life insurance policies for those seeking that additional peace of mind:
Myth 1– Life Insurance is Expensive
Fact1 – False, life insurance packages come for all budgets and costs on average 1% of household incomes.
Myth 2 – I am not the sole household earner, thus I won’t benefit from a policy
Fact 2 – It can be hard to see a benefit if you are not the sole income-earner but without knowing what life may throw at you having additional health and insurance coverage for the main earner could be incredibly useful should the worse happen. Things like extra childcare, home help and loss of a second income can be planned for with a suitable sum assured. You can just be insured to give someone a gift if you die, or create wealth for your family. There are many options to consider.
Myth 3 – I have employee life insurance so don’t need a new policy
Fact 3 – Whilst some employee packages will offer a life insurance, they are often limited in scope – its best to shop around and check for additional packages that might help cover all eventualities. When did you last check your employer life insurance details? And don’t forget, if you lose your job or change company, your benefits may not be the same.
Myth 4 – All life insurance policies are the same
Fact 4 – The insurance market is competitive and we are all entirely unique – each policy is naturally tailored to your circumstances, income, health and a wide array of other factors.
Myth 5 – I am fit and health, I don’t need a policy
Fact 5 – You are never too old for a life insurance policy and whilst you may be fit and healthy now, you never know what is around the corner. If you’re already sick when you apply for insurance, your application may be declined or your premiums unaffordable.
Myth 6 – The insurance company won’t pay out
Fact 6 – Insurance pay-outs on average are 90% and above across the industry, so there is every chance of a speedy pay-out. Most policies that don’t pay out withhold the money for very good reasons: the policy holder did not supply all the relevant information, or lied on the application form, are two of the top. Make sure you tell the truth when you apply and you’ll most likely get what you paid for.
Myth 7 – You’ll need a medical or to share your records
Fact 7 – You may need this depending upon the policy of choice – in general many policies will not require a full medical. Some providers do ask for medical records with your consent, especially if you have declared an illness or health condition.
Myth 8 – Life insurance policies act a little like a savings account
Fact 8 – At first glance it does look similar but for the most part it’s untrue – you may end up paying more into the pot than you may receive, but that’s not so different to car, home or pet insurance. The policies are there to help in a real emergency. Some types of policy do have an investment or savings element which will be reflected in a higher premium price, with an illustrated maturity value.
Myth 9 – Life insurance is a hassle to obtain
Fact 9 – The process of onboarding is a one off and is pretty straightforward and once completed it’s all done!