As strong believers in the importance of protecting the future of your family, we are quite concerned about some of the perceptions many clients have of our industry. These perceptions may impede the growth of our industry, but worse, leave many families unprotected.
Life insurance conversations can be tough. Most people don’t want to think about it, but it is an important conversation everyone must have at some point. Misconceptions about life insurance makes the conversation even more difficult to approach and sometimes makes people shy away from getting the coverage they need.
So we decided to hold these perceptions up to reality to see how they stand up, and maybe change your mind about how you see life insurance.
| Perception | Reality |
| Many people believe that life insurance is too expensive. According to the 2016 LIMRA Insurance Barometer study, the most common reason given for not purchasing some or more life insurance is the belief that it’s too expensive. | Advisers can show you a variety of term and permanent life insurance plans. They will find the policy that suits your needs, budget and lifestyle.
For example, a term life insurance policy offers protection at an affordable price for a set period of time. Insurance advisers can explain how this option helps protect dependants financially in case of an unexpected death during the high-need financial years. Plans with multiple term options allow employees to purchase protection that meets their needs without emptying their wallets. |
| People claim to have more important financial priorities right now: Not surprisingly, 59% of respondents in the LIMRA study listed other financial priorities as a reason for not buying life insurance. | What they don’t realize is that life insurance is an invaluable purchase they can’t afford to be without. Advisers can explain how life insurance may be one of the most important financial priorities to consider. The average mortgage balance is around $150,000 or more. How will your family keep their home if something happened to you?
Mortgage insurance pays off the mortgage, but what about the other bills? What about heat, hydro, food, clothing and all of the other things your family needs to survive? When an unexpected death occurs, life insurance can help survivors make ends meet. It may be a small comfort at this time in their lives, but a very important one. Loved ones are trying to deal with the loss. Financial difficulties on top of everything else would just be too much to bear. Without an insurance benefit to rely on, your beneficiaries could sell the family home, but it could take months to sell and they might have to sell at below market value just to survive. Where will they go then? Where will they live? How will they maintain their lifestyle? Advisers can show you how universal life insurance may be the answer. It offers permanent coverage and allows you to adjust the monthly payments to fit your current financial situation. In addition, many of these plans also include some form of long-term care benefit option that can help provide financial support if the need should arise. |
| Many people are not sure how much life insurance they need. The LIMRA study stated that 40% of respondents said they are confused about life insurance. They don’t know what type or how much to buy. | Advisers are here to help. They can guide you through the insurance landscape and help you feel confident about your choice. |
| Many people believe that only about half of all life insurance claims are actually paid. | In reality, all legitimate claims are paid. All policies have exclusions and exceptions, that is why it so important to fully understand what you are buying. |
| People over estimate the cost of insurance by nearly 400%. | Every policy is written for the individual. It’s true that people are categorized or grouped together (by age, sex, etc), but the final policy is based on you and the premiums are adjusted accordingly. |
| You only need life insurance if you are married with children. | Everyone can use life insurance. Even people that aren’t married or have children have debts and final expenses. Life insurance can cover these costs. |
| You don’t need life insurance when you are young. | Life insurance is something you have to buy before you need it. Buying it when you are young and in good health could mean lower premiums. |
| Life insurance doesn’t provide any benefits for the living. | Although the most common reason for buying life insurance is to provide financial security for your family in case of death, there are policies that can play an important role in your financial plan. These types of policies can build cash value that you can borrow against. |
| You don’t need your own policy if you have one with your employer. | Having an employer-sponsored life insurance policy is great, but could be temporary. If you leave the company, your coverage ends. |
| You don’t need life insurance if you have mortgage insurance. | Mortgage insurance only pays the outstanding balance on your mortgage. Should you pass away, your loved ones will have a home, but nothing more. Plus, the payments stay the same even though the amount of the payout declines as you pay down your loan.
The payout amount of a life insurance policy stays the same. Your loved ones will have enough to pay off the mortgage and have plenty of money left over for other necessities. |
