5 Myths About Life Insurance

Life insurance isn’t complicated, but there are some preconceived notions about getting life insurance coverage that are untrue. Here’s what you should know about life insurance. 

Myth 1: Life Insurance Is Too Expensive

Many people skip life insurance because they think it’s too expensive. In fact, the 2024 Insurance Barometer study found that about 72% of Americans overestimated the cost of a basic term life policy, and young consumers guessed it was priced at three times its actual cost. So talk to an insurance agent, and if you’re concerned about cost, consider a term life insurance policy. It’s generally less expensive than other types of coverage, and you can update your level of protection as your needs change. 

Myth 2: Young, Healthy People Don’t Need Life Insurance

Life insurance is a good idea regardless of your age. You can’t guarantee you won’t need it, and carrying a life insurance policy when you’re young — especially if you have dependents — will help offset the stress and trauma on your loved ones if you suddenly pass away. Plus, certain permanent life insurance policies have benefits you may be able to use while you’re still living. For example, whole and universal life policies not only provide a death benefit — the payout to your beneficiaries when you die – but also allow you to  use the accumulated cash value to help buy a home or subsidize your retirement income.

Looking for an immediate bonus? In general, the younger you are, the better your rates. And those rates could be locked in for life. Learn more about choosing the best insurance policies for young adults.

Myth 3: My Employer Offered Life Insurance Coverage Is Enough

Don’t let this life insurance myth leave you unprotected. Many employers provide a basic life insurance benefit, often equal to one to two times your base salary. Smaller companies may offer a flat life insurance amount. That’s certainly a great benefit! But it’s meant to be a supplement, and so it can lead you to feel a false sense of security. Depending on a variety of factors — age, salary, expenses, debts and future financial needs — you’ll likely need more coverage, particularly if you have dependents or a complex financial situation. Generally, an employer-provided life insurance policy is meant to supplement your personally owned policy and may not be portable if you change jobs. Think of it as a bonus on a policy you’ve bought on your own.

Myth 4: Single People Without Kids Don’t Need Life Insurance

Certainly, anyone with dependents should have life insurance. But a life insurance policy can help give you financial security if you’re single, too. For instance, proceeds from a life insurance policy can help cover funeral expenses and outstanding credit card debt so your loved ones aren’t put into a tough financial position. Living benefits can help fund your financial goals, including retirement. You can also use life insurance to help you leave a legacy you can be proud of.  Your beneficiary can be a loved one, but it doesn’t have to be a person.  It could be a charity you support or an academic institution, such as your alma mater. 

Myth 5: Children Don’t Need Life Insurance

As a parent, you want to set your children up for future success. Buying life insurance coverage for children guarantees that they can be insured the future. That means your child can buy more life insurance later, no matter their health conditions — so you’re giving them a gift now. Another benefit: purchasing life insurance for children locks in a good rate. It’s just one way parents and grandparents can give kids the gift of financial security — one that can be used to help pay for college or a down payment for a home.

How Much Life Insurance Do You Need?

Use our simple life insurance calculator to estimate how much protection you need. Then, connect with a Farm Bureau agent to get the right coverage for you.