Purchasing life insurance may not seem like a high priority at the moment, but life (and death) happens unexpectedly.
When you put off getting life insurance, your family members are the ones who are really being put at risk.
Let’s dive into The Top 10 Reasons People Put Off Buying Life Insurance, and lay some fears to rest in the process.
1: People Don’t Fully Understand Why Life Insurance is Important
This is the most common reason.
It has nothing to do with cost, health or family situation. A majority of people who don’t own life insurance just don’t understand the benefits.
According to a study by LIMRA and Insurance Barometer, 38% of participants cited “I’m not sure how much or what type to buy” as their reason for not purchasing.
Let’s address this immediately.
I won’t go over every benefit of life insurance because that’s for another article, but here’s the run down and what you need to know.
1. Life Insurance is protection from financial loss.
If you have a mortgage, 3 car payments, are paying for daycare and saving for your children’s college, this is the most important reason for life insurance.
What would your family situation look like if you or your husband/wife passed?
Would they be able to pay for everything on their own?
Even if you aren’t the breadwinner, if you pass away, who will take care of your kids when your spouse has to work?
Both roles are important to the family being secure.
If money is already a little tight, it is important to know how severe the loss of your income would be to your family.
3. Useful to pay off debts.
It is nice to know that, regardless of what happens to you, you won’t be leaving those types of big burdens on your family.
4. Pay Off Estate Taxes
Many families that are financially secure need to keep this in the back of their mind.
Life Insurance can be an excellent vehicle for paying off the taxes on your estate, and even shrinking the taxes owed when set up properly.
5. Final Expenses
This is something that people often don’t want to think about, but final expenses are costly.
Whether it is the funeral, casket etc., many families don’t have the ability to come up with that money out of pocket.
There are dozens of additional reasons why life insurance is important to have, and not something to put off.
But let’s continue to understand why some people continue to do so.
2: I’m healthy, I’m not going to die soon so I don’t need it
Knock On Wood.
No. but seriously, this is a very unwise way to look at life insurance.
It’s a common misconception that if you’re young and healthy, you don’t need life insurance.
No one can predict the future. Being in good health does not make you immune to life’s many accidents and tragedies.
Funny thing is, if you’re under 40 with a clean health record, this is the best time to sign up for a life insurance policy.
By buying now, you’ll have a lower monthly rate and get access to more life insurance plan options.
This is why we always urge people to apply for a life insurance policy as young as possible, and lock in those great rates.
If something drastic changes in your health, or you suffer an injury, you will be glad that you locked in your insurance policy when you were young and healthy.
3: It’s Too Expensive
I would say that even if Life Insurance WERE too expensive, it would still be much more costly to NOT have life insurance.
Many families still live paycheck to paycheck, and have bills like the mortgage to worry about paying, not a life insurance premium.
While it’s not always easy to find “extra” money, it’s still very important that you find a way.
You think it’s hard living paycheck to paycheck now while also raising a young family, imagine taking away half your family’s income.
It is a safety net that every family needs, to know that if the worst happens to you or your spouse, your family would not be financially ruined.
This is a good reason EVEN IF life insurance was expensive, but that is just not the case.
Term Life Insurance is incredibly affordable giving the benefits and piece of mind that come with owning a policy.
Young, healthy people who lock in good rates on their life insurance, often end up paying premiums that are so little, they aren’t even noticeable when paying off.
This often tiny premium, is a small price to pay for your family’s financial protection.
3a: “I Can’t Afford Life Insurance Because I have a Pre-Existing Condition”
While life insurance may come with low premiums for healthy individuals, what about the not-so-healthy people?
Another big reason people don’t purchase life insurance is the fear of extremely high premiums due to pre-existing health conditions.
Yes, having a pre-existing condition can alter your life insurance policy and you’ll probably pay a higher rate.
However, the price of your policy will also be determined by how you treat your condition.
If you’ve been diagnosed with a disorder or a disease, a proper lifestyle and preventative healthy habits can lower your monthly payment.
Additionally, if your health is deteriorating, you don’t want to put your family in any more jeopardy. Purchasing life insurance should become an even higher priority.
4: It’s Just Not a Priority
No one is forcing you to buy life insurance.
Even though you understand the benefits and think it’s a good idea, you just aren’t concerned enough to actually purchase a policy.
Many people think that they will own life insurance at some point, but other things take precedent when it comes to spending their money.
Things like new cars, long overdue vacations, or buying a new house, is seemingly a better use of that money at this time.
That same study by LIMRA, showed that 60% of Millennials consider their cell phone, Internet, and cable payments higher priorities than purchasing life insurance, with 49% of those 65 and older saying the same thing.
Buying Life Insurance might not be the number 1 priority for you right now, but I’m sure that keeping your family financially protected, is.
5: Life Insurance Through My Job Is Enough
It’s a semi-typical practice of businesses to offer life insurance to their employees as part of their benefit package.
There are 2 reasons why the life insurance offered through your work isn’t enough. 99% of the time, these life insurance policies are Group Policies and if you get fired, or move onto another job, your insurance does not carry over.
If you own your own policy outside of your work policy, then you never have to worry about losing coverage just because you change jobs or companies.
The other reason that this isn’t enough, is that the Death Benefit amount of your life insurance policy through work is limited.
While there’s no industry-wide accepted amount of death benefit needed, a safe starting point is to try to have 15-20 times yearly salary in death benefit.
Most policies through work only have Death Benefit payouts of 1-2 times salary.
This leaves you quite underinsured.
It is vital that you think of your life insurance through work as a “bonus” and not assume that it’s enough to keep your family financially secure.
6: Isn’t Life Insurance Only For Old People?
Short answer, no.
While it may be more useful for older folks that are at a higher risk of needing the policy, age isn’t a factor when considering need for life insurance.
The reasons someone would need life insurance are to:
- Protect your family’s financial future
- Pay off debts
- Fund estate taxes
- Final Expenses
None of these reasons have to do with age.
If anything, life insurance may be LESS useful for older people, because they often no longer have children that need to be financially taken care of.
A married couple in their 30’s with a newborn have a much higher need for life insurance.
What is the best age to get life insurance?
Now that we see life insurance isn’t only for old people, let’s see what the ideal age to purchase life insurance actually is.
Studies show that anytime under age 35 is ideal.
However, most individuals under age 25 are more concerned with paying current bills than acquiring additional ones.
While the optimal age to purchase life insurance is under 35, millennials are the least likely to purchase a policy.
In 2015, individuals between 18 and 35 overestimated the cost of a policy by 213%.
7: “I don’t want to go through a medical exam”
The medical exam used in applying for life insurance is just like a routine physical.
It usually involves a blood and a urine sample and monitoring things like you’re your heart rate, weight, and height.
There’s nothing scary about it. Plus, if there are any issues with your health, you’ll want to know sooner rather than later.
Even though a medical exam for life insurance is a breeze, there’s another option where you can skip the medical exam altogether.
To do this you just need to apply for a no medical exam life insurance policy.
This isn’t the ideal solution for people in good health, because without a medical exam, an insurance will usually mitigate the risk by charging a higher premium in exchange for not checking off on the medical exam.
Alternatively, a no medical life insurance policy is a good option for people who may be worried that their health could cause them to pay extremely high premiums on their life insurance policy.
8: I’m Just Not Ready To Think About Death
A fear of death can make people act superstitiously and illogically. Applying for life insurance does not make death any more probable.
In fact, a life insurance policy may help you face your fears and help to prolong the inevitable.
Death is a natural part of life. Don’t let your fear of it get in the way of protecting your loved ones.
9: The Only Good Reason – “I Don’t Have Kids”
Not having kids, would be a good reason not to get life insurance.
But this is only for those people who have ZERO dependents counting on their income in any fashion.
Are you married and make a majority of the income?
Wouldn’t you feel better knowing that your spouse wouldn’t be thrown into a tough situation of not having you, and then having to pick up that extra slack financially?
What about those that care for their elderly parents?
Would a full-time nurse need to be hired if you weren’t around to take care of your parents? How will this be paid?
Life insurance is less of a child-only investment, but its a smart move for anyone that has financial dependents.
Hopefully this guide helped you realize whether life insurance is a good investment for your family’s financial situation.
If you read this and realized that your family would benefit from the financial protection that comes with life insurance, don’t be one of the people who put off buying life insurance.
CEO - Licensed Agent
In my 20+ years as an independent life and disability insurance broker, I have personally assisted thousands of clients with their life and disability insurance needs. Being independent, I represent many highly-rated insurance companies and, because I am not beholden to any one insurance company, my focus is to find the right company and policy for each individual client. I believe that when people shop for insurance (or anything else, for that matter) on the Internet, they are looking for a simple, non-intrusive, non-pressure method of doing so. I strive to treat my prospective clients with the utmost respect and I believe an educated prospect can make the right decision without sales pressure. Please feel free to contact me at your convenience.