Here’s the scenario: You have other people — maybe kids, maybe an older parent — depending on your income, the care you provide day-to-day or both. Do you have life insurance? If not, you’re not alone. Only 56% of women had coverage in 2016, according to the Life Insurance Marketing and Research Association. That’s a problem considering that 86% of women age 40 to 44 are mothers. If you have dependents and no coverage, it’s time to ask why. Maybe one of these life insurance myths is getting in your way.
Myth #1: You Don’t Really Need It.
Many women who are not primary breadwinners of their household or don’t earn any income at all may assume that they don’t need life insurance. But even if a partner isn’t bringing a weekly paycheck, the work that they do would cost a lot to replace. “People underestimate what it costs to run their lives,” says Michele Lee Fine, president of Cornerstone Wealth Advisory and a representative with Guardian Life. This is certainly true of stay-at-home moms. After all, life insurance is often branded as a means of replacing lost income from your job. But think about it this way: if you’re a mother looking after your children, taking care of the household and preparing meals, how much would it cost your partner if you were no longer there to manage? “Many people fail to understand how expensive it would be to replace that,” says Susan Sachatello, President of TruStage at CUNA Mutual Group.
Myth #2: You Can’t Afford It or Qualify for It.
Some life insurance are expensive, but Sachatello says that her customers estimate the cost of a policy to be up to 250% more than it actually is. The market is vast and eclectic with countless options that may be right for you, depending on your age, income, budget, health, etc. Even if you can’t afford life insurance that would completely pay off your mortgage and send your children to college, purchasing a policy that will cover your family even for a few years may still be beneficial — it can give everyone time to catch their breath and devise a plan. Furthermore, if you’re estimating your rates based on what your friends’ rates are, it can give you a skewed idea of reality, says Logan Sachon, a life insurance expert with PolicyGenius. “If you’re talking to someone who has a permanent policy,” she explains, “it can cost anywhere from 6 to 10 times more than a term life policy.” Cheaper term life policies are all that most people really need, echoes Avani Ramnani, director of financial planning and wealth management at Francis Financial.
Myth #3: You’re Too Young.
Different life stages require different coverage needs, but Sachatello says the best time to start thinking about life insurance is when you start making important life decisions. Even those of us as young as college-aged may have a need. For example, if your parents co-signed a large student loan, you may want to protect their finances if something were to happen to you. Another good example is a working immigrant who may be sending a portion of their income to their family, and would want them to have a safety net if something were to happen.
A lot of women may not consider life insurance until after they have children, but Ramnani says you may want to give it some thought before you get pregnant — the baby weight you gain could put you in a higher premium class, and there are several pregnancy-specific diagnoses that could also have an affect. Lastly, consider that with many policies, the cost of your payments are locked in when you first purchase, so the sooner you do it, the less you’ll pay per month. “On average monthly rates go up around 8% per year,” Sachon says, “even if your health stays perfect.”
Myth #4: Your Term Rates Will Be the Same With Every Carrier
Some people may review the quotes they get from one insurance agency and decide they might not qualify for a lower rate at a different company, but you should get a second, third and maybe even a fourth opinion, Sachon says. “The same person can be rated completely differently by different carriers. Someone who is on Prozac and has diabetes may be a worry for one carrier, and not for another,” she explains, adding that rates can sometimes fluctuate by as much as 40%.
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