Common Myths Behind Life Insurance
Life insurance, as we know it, is more about preparing yourself and your family in the event of your death. The prospect of getting life insurance is less about getting to protect ourselves throughout our lives, but more about protecting our families and lifestyles at the end of our life. That very notion is one reason why life insurance policies are ‘sold’ to life insurance policy holders, rather than bought.
Misunderstandings like these make up the prevalence of life insurance myths nowadays. Life insurance myths are more common than you think, since a lot of people have it decided that they don’t need a life insurance policy. If they’re the sole financial provider for their family, however, chances are that they do need a life insurance policy.
Do you think there’s as many life insurance myths out there as they claim? Let’s take a look at three of the most common life insurance myths you might stumble upon nowadays.
The most common life insurance myths
1. You don’t have to worry about your health.
There are many life insurance policy providers that promise a low-cost, no-exam guaranteed life insurance policy. They even promise that they won’t turn you down, regardless of the condition of your health.
To be honest, many of these policies don’t fulfill their promises–and actually end up costing more than they promised to issue out as benefits. The costs are due to the increased health risks from, you guessed it, the policy holder. Coupled with prospect of very few people receiving good rates to begin with, and you can see why that it’s imperative for policy holders to stay in good health.
2. Agents usually disclose their commission information.
Life insurance agents rarely disclose their commission information, even if you think they do. In fact, the life insurance industry is known as the last financial industry to keep agent commissions under wraps. This is mainly attributed to how life insurance is sold to prospective customers: if customers know how much an agent earns on their commission, it could potentially spoil the sale.
Even though the international practice of divulging agent commission information is slowly making its way to the United States, for now, most life insurance customers shouldn’t expect to get that information right away.
3. Life insurance is always a good investment.
Even though whole life insurance sounds good in name, many industry experts don’t consider life insurance to be a good investment. In fact, it’s known that the life insurance industry may coax customers into signing up just because they can, and not because they’re making a sound investment.
Many whole life insurance customers also end up dropping out of their life insurance policies within 10 years of signing up; some have even dropped out as soon as two years after enrollment.
Most people who drop out rarely get a good return on their invested money, too. Such a phenomenon is the main reason why experts suggest to invest in term life insurance instead—and to place the savings elsewhere.