Dive a little deeper into life insurance, and it won't be long before you start to hear some of the life insurance myths and misconceptions floating around.
Although these sometimes pass for conventional wisdom, they aren't always entirely accurate. At Ethos, we believe when it comes to something as important as protecting your family, it’s critical to have the right information to make the best decision.
That’s why we’re providing information to help dispel some of the most common life insurance myths below. Life insurance doesn’t have to be confusing or intimidating—especially when you know the facts.
Myth #1: I don't need life insurance if I'm young and healthy
You're young and healthy, you say? That's great news because right now might be the best time to get life insurance. Having a risk level is lower than those who are older or have health issues, generally means you can lock in lower premiums. On average, the cost of premiums increases by 8-12% each year, meaning for every year you wait, you may pay more. Securing a low rate now can potentially save you a significant amount over time.
If you're in your twenties and thirties, it might not be long before you buy a home, get married or have kids. Having a life insurance policy can help protect your growing family. It can help cover your mortgage expenses, pay for future educational costs and supplement daily living expenses in the event of your passing.
Even if you don't plan to buy a home, get married or have kids, life insurance can still help protect your loved ones. With so many people in their twenties and thirties struggling with student loan debt, those costs could pass to your parents or loved ones. A term life insurance policy can help them from the burden of paying off your student loan debt.
Myth #2: Life insurance through my employer is enough
This one is a widespread life insurance myth. Life insurance through your employer is great to have and certainly a nice perk! But the fact of the matter is it likely doesn’t give you nearly the coverage you need.
Most employer-sponsored plans offer somewhere between 1-3x your annual salary. While that's a start, it’s generally not enough. One common rule of thought suggests that you should have around 10x your yearly income in life insurance to help cover potential needs.
Something you want to check with your employer-sponsored plan is what happens if you quit or get laid off from your job? If your policy does not go with you to a new job, you could have no coverage at all. Having a policy of your own in place helps ensure you're protected.
Myth #3: It's too expensive
Most people overestimate the cost of life insurance. One study from LIMRA found over half of Americans think life insurance costs three times as much as it actually does. The same survey found 44% of Millennials estimate that a 20-year term life insurance policy for a healthy 30-year-old would cost $1,000 a year. The actual cost of that policy? About $165 a year, less than a Netflix subscription.
All too often, life insurance is a cost that's put on the back burner, ahead of other financial needs. The real problem with the misconception that life insurance is too expensive is it puts families at risk for financial hardship if the wage earner passes unexpectedly. The reality is, life insurance can be more affordable than you think. Having a policy in place can help protect your loved ones right when they need it the most.
Ethos makes it easy to check your price and lock in an affordable rate. You can get started with a free online quote today.
Myth #4: Stay-at-home parents don't need it
Often with life insurance, the focus may be on the primary breadwinner and finding a policy to help replace their salary. But stay-at-home parents are providing work that's just as valuable, even if they aren't bringing in a paycheck.
According to Salary.com, stay-at-home parents contribute the equivalent of over $179,000 in annual salary to their families. If you think those numbers are eye-popping, think about everything you provide at home and the cost to replace those tasks. Some of these costs include child care, cleaning, transportation, meal preparation, tutoring and more.
If the stay-at-home parent were to pass unexpectedly without a life insurance policy, the breadwinning parent may have to have to cover much of these costs, which could be financially taxing.
Myth #5: I can't get it because I have a pre-existing condition
Since your health plays a big role in obtaining life insurance, having a pre-existing condition can make it harder to find quality coverage. And with some conditions, it can be more difficult to qualify for traditional policies. That could leave you and your family unprotected.
Thankfully, having a pre-existing condition doesn’t necessarily prevent you from getting coverage—there are options out there. Through Ethos, you can apply for life insurance policies with simplified levels of underwriting. This means that the application process is simplified, with no medical exams and only a few health questions asked on the application. These policies are designed to help provide coverage to people who might not qualify for more traditionally underwritten policies.
Myth #6: I only need 2-3x of my salary worth of coverage
One of the biggest questions people ask about life insurance is how much coverage do they need? There are a few factors to consider, including your debt, income, remaining mortgage and education costs. When you add all those up, you may find your employer-sponsored coverage isn't going to take care of all those needs.
If you have coverage through your employer, it's probably only going to provide between 1-3x your salary. As covered above, that doesn’t meet the common benchmark of 10x your annual salary. So if you're only using your employer-sponsored coverage, chances are it’s not enough. It could leave a pretty large gap between all those costs you might need—mortgage, kids college funds, childcare and living expenses—and what your policy provides.
To help you figure out what you need, Ethos offers an easy-to-use coverage calculator. Answer a few questions, and you'll get an estimate of your coverage needs.
Ignore the myths and get the facts
At Ethos, we want to make life insurance both convenient for you and easy to understand. That's why we've created a consumer-friendly life insurance process which helps remove the guesswork and confusion from applying for coverage.
You can do it all online. Filling out our application only takes about 10 minutes. Most customers get a decision on the same day. And best of all? The majority of people who apply for personalized coverage don't need a medical exam. All you need to do is answer a few health questions to get started. Ready to help protect your family in a matter of minutes? Click here to get a personalized estimate today.