Common Myths about Insurance

Myth #1: Make a claim at every opportunity!

Many people think that as long as they are paying premiums they should use their right to make a claim every time they have an accident, weather damage to their house or other situation covered by their policy.

But you don’t buy insurance to reimburse you for every single occurrence, you buy it in order to save yourself financially if disaster strikes. If you can afford to pay for damage or a loss yourself with no financial hardship, it’s best to do so rather than file a claim. The more claims you make, the higher your premiums will be!

Myth #2: Everyone Needs Life Insurance

If you don’t have anyone depending on you for financial support, you usually don’t need life insurance. While it’s wise to have a small policy to cover burial expenses, there’s no need to have high dollar coverage if you have no dependents.

What about those offers you get for children’s life insurance policies? They can help, of course, if the worst happens but they are more beneficial to the insurance companies than to your family.

Myth #3: Only the Working Parent Needs Life Insurance

Take a moment and think of all the jobs a stay at home parent is responsible for. If that parent died, could you afford to hire a person to manage your finances, a housekeeper, a cook, a gardener, a social coordinator and a laundry service? That’s only a fraction of the chores done by a stay at home parent and would probably cost you several times your annual salary for just one year! Daycare alone would cripple your budget.

Life insurance is just as important for a stay at home parent as it is for the breadwinner. While money can’t replace a parent’s love, it can allow you to stay at home with the children for a time to help ease the loss. Even if that’s not necessary, the policy will at least make the transition run smoothly.

Myth #4: Term Insurance isn’t as Good as Whole and Universal Life

People think that whole and universal life insurance is the best because it is an investment in the future. You can borrow against such a policy and part of your premium is invested and can be cashed in at some point. However, you would be making a better choice if you bought term insurance because of the lower premiums.

Investing the difference between the costs of the two in a retirement account is a much better decision.

Myth #5: Only People in High Risk Areas Need Flood Insurance

Floods can happen at any time and in nearly any location! You may not think your area is at risk of flooding but extended rainfall, faulty dams and even a backed up sewage system can damage your home.

It’s best to have coverage and not need it than need it and not have it!

Myth #6: My Teen has a Delivery Job but is not Self-Employed so He’s Covered by Our Car Insurance

Any time your car is used for business you should have business coverage. If your teen delivers pizza or uses the car in order to make money, you might not be covered if she or he has an accident. Check your policy or call your agent to make sure that you have the coverage you need.

Myth#7: Social Security Will Take Care of Me if I am Disabled

Social Security is a big help to disabled people but it can take months and even years to get approved for benefits and many people are rejected. If you are approved, the benefits will likely be much less than you made when you were able to work! Disability insurance is a smart purchase and will insure that your life is disrupted as little as possible should you be disabled.

Myth #8: The Government will Pay for a Nursing Home if I Can’t Afford to

The only really sure thing about the government is that they’ll raise your taxes. Counting on it to pay for a nursing home when you are old and unable to live independently is taking a very big chance with your quality of life. While Medicare and Medicaid can help with the costs if you qualify, having long term care insurance is the best way to be sure you are cared for.

If you rely on government programs for your needs, it is very likely that your family will be picking up the tab!

Myth #9: I Don’t Need Umbrella Insurance Coverage Because I’m Not Wealthy.

While umbrella insurance is used by the rich to protect their finances, nearly everyone can benefit from having this type of insurance. We have a very litigious society and your chances of being sued are just as great as anyone else’s. Umbrella insurance increases your coverage beyond the limits of your auto, personal and homeowner’s policies.

The premiums for umbrella coverage are very low and the additional security it gives you is well worth the cost.

Myth #10: It’s Nobody’s Business if I Don’t Choose to Have Health Insurance

Actually, it’s everybody’s business. Your decision affects everyone who does purchase health insurance. What happens if you need emergency surgery and you aren’t insured? You’ll either be paying those medical bills for years or the providers will have to absorb them and pass the costs on to consumers.

If your employer offers insurance and you don’t accept it you are affecting the rates and coverage of all your co-workers. In addition to telling your employer that health insurance is not an important and appreciated benefit, you not being in the pool as a healthy individual raises the costs for everyone. The more healthy people are in a group, the more the risk is spread and the less the costs will be.

There are many people who cannot afford insurance; they barely meet their daily expenses and buying insurance would mean giving up food or shelter. When they are sick or injured it is usually the local, state or federal government that foots the bill in the form of our tax dollars.

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