5 Myths about Life Insurance, And Why you Need A Plan Now

Think back on your day so far. How much tech have you used today to make your day better, easier, or more personalized? And how much of that tech didn’t exist even five years ago, let alone ten or more? It’s cliché to say that recent tech innovations have completely transformed the way we live, but that doesn’t mean it’s any less shocking when you sit down and really think about it.

Still, there are some areas of life the tech revolution seems to have missed. Consider, for instance, purchasing life insurance. Aside from waiting in line at the DMV, few scenarios conjure more analog-style horror. And if you don't know how bad the process is, maybe you haven't looked into it because you didn't think you needed it.

Do you? And if you do, how do you actually figure out how much you should pay? And from where? And do you have time to sign up in the first place? Can’t you wait until way later in life? It's stressful to think about, but it's important, and maybe by knowing more you'll be less stressed. Let’s run through a few myths about life insurance and separate fact from fiction to find out how to find the right life insurance.

Myth #1: Life insurance is time-consuming

Let’s start with the big one. Plenty of people put off buying life insurance because they assume it will take an overwhelming amount of time and will be too hard to figure out. That may have been true years ago, but some companies are bringing life insurance into the digital revolution — and making things much quicker and simpler for you, without towers of paperwork.

The online application from Life Solutions , for instance, takes mere minutes to complete. They offer term life insurance, which for most people is the more flexible and affordable life insurance option. It’s a straightforward product that provides coverage for a set amount for a set period of time or “term,” typically 10–30 years — simply designed to protect your dependents. You might start there.

Myth #2: It’s so complicated that I need to work with a financial planner to ensure my life insurance needs are met

Financial planners often make commission on selling an overly complex policy that you just don’t need, rather than a more straight-forward, simple policy that gets the job done for less money. This may result in you paying more for unnecessary coverage. Life Solutions uses its tech savvy to ensure you have the right policy, and there is no need to worry about upselling. That means they work to find the best policy for you. In fact, Life Solutions uses machine learning to analyze its customer data and ensure customers don’t overpay for their coverage. Life Solutions prioritizes people over profit, because they believe it's the right thing to do.

Myth #3: Life insurance is unaffordable

If you imagine life insurance is unaffordable for you, you’re not alone: 44 percent of Millennials think life insurance costs five times as much as it does in reality. To find the truth, let’s quickly examine two types of life insurance. Many people likely conceive of life insurance as a single policy that covers you for your entire life. That type of insurance does exist, and it’s called whole life insurance. With whole life insurance, you pay money every month (the "premium") into a plan, but some of it goes into a cash savings account to help the insurer pay for your coverage in the future. So, this cash doesn’t really belong to you.

To explain: yes, you then collect a check for the cash value of your policy — that is, once you reach the “maturity age” designated by your insurance company. That age is usually set at between 100-120 years. You read that correctly. If you don’t live to be 120, you and your family won’t receive the cash value for your policy. All that money over the years — it goes back to your insurance company. (Though, to be clear, if something does happen to you while you own and pay for the whole life insurance policy, your beneficiaries would receive the cash value of your coverage amount.)

Luckily, there’s a better way. Term life insurance allows you to save on premiums while receiving the right coverage and freeing up more of your money for retirement investments. It’s the more practical and affordable option for most people. The premium you’ll pay on term life insurance is usually much, much lower than the premium you’d pay for whole life insurance. 

Myth #4: I’m young, single, and healthy, so I don’t need life insurance

Ultimately, this one’s easy. Life insurance is for the unexpected. Since most young people will pass through their younger years without any trouble, you don’t pay much for life insurance when you’re young. Picking up a term life insurance plan at a young age allows you to invest in a policy without spending as much as you would when you’re closer to retirement age.

Further, even when you’re young, you have people in your life who could be impacted financially if you were to pass away suddenly. In fact, young people are increasingly taking on the role of caregiver from both a physical and financial perspective. By taking out a life insurance policy, young people can help ensure their parents will be financially protected for retirement, no matter what happens.

For instance, when a young person with debt from private student loans — or any co-signed debt — dies, that debt then passes to their parents. In the current economy, where the Boomer generation’s retirement savings have been hit hard by the 2008 recession and other factors, many working adults simply don’t have the funds to comfortably enter retirement on their own. To sum it up, taking out life insurance when you’re young won’t cost much but could save your loved ones a lot of financial strain.

Myth #5: Only breadwinners need a life insurance policy

This view is particularly outdated: Couples today live off of their combined income. Losing one of these sources of income would force the other to drastically alter their way of life. A good life insurance policy helps to prevent that problem.

Moreover, stay-at-home parents shouldn’t discount life insurance just because they don’t bring in income. In fact, some studies estimate the value delivered by stay-at-home parents as over $160,000 on average, if they were paid for the tasks they do (childcare, housekeeping, bookkeeping, and so on). If that stay-at-home parent can’t cover their home’s expenses on their own, life insurance is a smart move.

It can be intimidating to step into the world of life insurance, with so many choices and such a wide range of costs and plans. But the benefits for you and your family can outweigh that initial discomfort — especially once you brush away the myths surrounding life insurance and discover how simple and affordable it can be to find the right plan for you. Consumer-forward and tech-friendly services like those offered by Life Solutions can make the journey much easier, and it’s never the wrong time to find the right life insurance.

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