Insurance and Finance

Busting 3 Life Insurance Myths

By Lisa Martin 1.23.13

Though life insurance premiums have sunk to unprecedented lows, fewer Americans are taking advantage of the great rates. In fact, according to a recent study by the research firm LIMRA, a mere third of Americans are covered by individual life insurance — the smallest percentage in 50 years.

The following life insurance myths may be to blame for at least some of the decline.

Myth 1: Life insurance is too expensive

Michael Barry, a vice president at the nonprofit Insurance Information Institute, says that many consumers grossly overestimate how much they’ll need to spend for a life insurance policy.

“Term life insurance can provide beneficiaries with a very cost-effective form of financial protection,” said Barry.

Ask your Texas Farm Bureau Insurance Agent to guide you through the benefit packages and premiums of both permanent (or whole) life and term life, which typically offers the most coverage for the lowest initial premium cost.

Myth 2: My wife doesn’t need life insurance

LIMRA’s research also reveals that a third of American wives have no life insurance at all — in spite of the fact that 7 in 10 households are dual-income households, and nearly 30 percent of wives earn more than their husbands. This dovetails with LIMRA’s findings that half of U.S. households — a staggering 58 million — are uninsured or underinsured.

Myth 3: Covering my kids isn’t necessary

Jaimee Niles, a spokeswoman for the nonprofit Life and Health Insurance Foundation for Education, offers a compelling reason to insure the life of a child.

“A major illness, a newly developed chronic health problem or even a catastrophic accident with permanent injuries can result in the child being considered uninsurable for life,” she adds. “If a life insurance policy was in place, especially one with a guaranteed policy purchase option for additional insurance in the future or the option to convert from term to permanent, the child will continue to be covered, regardless of what happens in terms of his or her physical health.”