Busting the 5 Biggest Life Insurance Myths (And Why You Need Coverage Now)

Busting the 5 Biggest Life Insurance Myths

Life insurance. Just the phrase can conjure images of complicated paperwork, confusing jargon, and something you only need to worry about much later in life. 

This topic is often surrounded by so many myths and misconceptions that many people especially young families end up delaying or completely avoiding a purchase that is critical to their financial security.

The truth is, life insurance is less about death and more about love, responsibility, and securing the future of the people you care about most.

We’re here to clear the air. Below, we tackle the five biggest, most pervasive myths that stop people from getting the coverage they need, and we give you the simple, reassuring facts.

Myth #1: "Life insurance is too expensive. I can’t afford it."

This is, without a doubt, the number one reason people delay buying coverage. The perception is that a substantial policy will cost hundreds of dollars every month.

The Reality: You are likely vastly overestimating the cost.

Studies consistently show that the majority of Americans, particularly younger ones, overestimate the true cost of a term life insurance policy by two to three times its actual price.

The truth is that term life insurance, which is the most popular and affordable type of policy, can be incredibly inexpensive, especially if you are young and healthy.

• A Healthy 30-Year-Old Example: A healthy, non-smoking individual in their 30s can often secure a 20-year, $500,000 term life policy for the price of a streaming service or two—sometimes as little as $25 to $35 per month.

• Controlling the Cost: Your premium is based on a few key factors you can control: the type of policy (term is cheapest), the length of the term, and the amount of coverage. A qualified agent or online calculator can help you find a policy that fits your budget perfectly.

• The Cost of Waiting: The longer you wait, the more expensive it gets. Life insurance premiums are based primarily on your age and health. Every year you age or every new health condition you develop will make your policy more costly. Locking in a low rate now is the best financial move you can make.

Myth #2: "I only need my employer-provided coverage."

Many companies offer a basic life insurance policy as an employee benefit, usually at no cost to you. This is a great perk, and many people stop there, assuming they are fully covered.

The Reality: Employer coverage is a bonus, not a comprehensive plan.

Your group policy is almost certainly not enough to replace your income and cover all your family’s major expenses.

• Insufficient Coverage: Most employer-provided policies offer a death benefit that is a flat amount (like $25,000) or simply one to two times your annual salary. If you make $75,000, a $150,000 payout sounds like a lot, but is it enough to cover a mortgage, college tuition, and 10+ years of living expenses? Unlikely. Financial experts generally recommend 7 to 10 times your annual income.

• It’s Not Portable: The biggest problem with group coverage is that it is tied to your job. If you switch companies, get laid off, or retire, you almost always lose your coverage entirely. This forces you to shop for a new policy when you are older and potentially less healthy (and thus, your new premium will be significantly higher).

• The Solution: Consider your employer's policy as a nice supplement to your own individual policy. An individual policy you purchase is portable, permanent (if it’s whole life), and tailored to your family’s exact financial needs.

Myth #3: "I’m young, single, and healthy. I don’t need life insurance yet."

The logic seems sound: if no one depends on you financially, why get life insurance? This myth is particularly pervasive among Millennials and Gen Z.

The Reality: Being young and healthy is precisely why you should buy it now.

While you might not have dependents yet, life insurance serves a few vital purposes for the young and single:

1. Lowest Rates of Your Life: As discussed, your premium will never be cheaper than it is today. You can lock in an incredibly low rate and keep it for the next 20 or 30 years. If you wait until you have a spouse and a child, you could be paying double or triple for the same amount of coverage.

2. Protecting Cosigners and Debts: Do you have private student loans, a mortgage, or a car loan that was cosigned by a parent or other relative? If you pass away, that debt doesn't magically vanish—it usually falls on the cosigner. A small life insurance policy ensures the death benefit can immediately cover that debt, protecting your family members from financial ruin.

3. Covering Final Expenses: Even a simple funeral, burial, or cremation can cost between $7,000 and $15,000. Do you want your parents or siblings to be forced to cover that expense unexpectedly? A policy covers these final costs so your family can grieve without financial stress.

Myth #4: "I'm a stay-at-home parent, so I don't need life insurance."

The thinking here is that life insurance is only for the "breadwinner" whose income needs to be replaced. Since a stay-at-home parent doesn't bring home a salary, many assume they have no financial need for a policy.

The Reality: Replacing the services of a stay-at-home parent is extremely expensive.

While a stay-at-home parent may not have a cash income, they provide invaluable economic services. If they were gone, the surviving, working spouse would face enormous new costs to replace those services:

• Childcare: The cost of full-time daycare, a nanny, or after school care.

• Household Management: The cost of cleaning services, laundry services, and meal preparation.

• Transportation: The cost of a driver or an increased use of taxis/rideshares to transport children to activities and appointments.

Economists estimate the value of these services can be equivalent to a full-time, six figure salary. 

A life insurance payout ensures the surviving spouse can hire the help they need to maintain the household and avoid becoming overwhelmed while they continue to work. 

A stay-at-home parent policy is one of the most loving and responsible decisions a couple can make.

Myth #5: "I have a pre-existing medical condition, so I won't qualify."

If you have a chronic health condition like diabetes, high blood pressure, or a history of cancer, it’s easy to assume you’ll be immediately denied or face exorbitant rates.

The Reality: Coverage is available for almost everyone.

While your health history will certainly impact your premium, it is rarely an automatic disqualifier. The life insurance industry has evolved, and policies are designed to cover a wide spectrum of health risks.

• Standard Underwriting: In many cases, a well-managed condition (like controlled diabetes or treated sleep apnea) may only result in a slightly higher-than-average premium, which is still likely affordable.

• Simplified & Guaranteed Issue: For those with more serious or recent health issues, there are specialized options:

  • Simplified Issue: Requires you to answer a few health questions, but skips the medical exam.

  • Guaranteed Issue: Requires no medical exam and no health questions. Acceptance is guaranteed, though the coverage amount is typically smaller (designed to cover final expenses) and the premium is higher.

The key is simply to apply or speak with an experienced agent who can shop your application across multiple carriers to find the best available rate for your unique health profile.

Take the Next Step: Move from Myth to Action

Don't let these five common misconceptions keep you from securing your family's financial future. Life insurance is an accessible, affordable, and essential part of any solid financial plan.

Ready to find out the real cost of coverage for you?