10 Myths about life insurance debunked
Life insurance isn't a topic that most of us want to think about - even though we know it's important. It can sometimes be confusing, which isn’t helped by the common misconceptions about life insurance. The trouble with misconceptions, is that it can stop people from making a decision about the cover they might need.
In this article, we tackle 10 life insurance myths to give you a clearer understanding of what’s what when it comes to getting the right cover for you.
Myth #1: I’m not the highest earner in our household, so I don’t need life cover
You don’t need to be the main earner for your death to have a huge financial impact on your family. For example, if you take care of the children or the household while your partner is at work, a cash sum could cover childcare costs or pay for extra support around the house. This could give your partner the option to continue working should the worst happen to you.
Myth #2: I’m young and healthy, I don’t need life cover
If you have financial dependents – children or adults who rely on you financially – you’re never too young to take out life insurance.
For more information on when to consider cover, read our article on When should I get life insurance?
Myth #3: Insurers don’t pay out
Providing it's a valid claim, a pay-out will be made. In 2019, we paid out over 97% of life claims.
Read our guide for more information on how life insurance pay-outs work.
Myth #4: Life insurance is too expensive
Our life insurance starts from £6 a month, which is equivalent to about 20p a day. You can also save money by paying your premiums annually.
Myth #5: Life insurance pay-outs are always taxed
Life insurance pay-outs are exempt from income or capital gains tax.
Depending on the value of your estate when you die, the pay-out may be subject to Inheritance Tax (IHT).
However, you can avoid this outcome by putting your life insurance policy into a trust, which can also speed up the time it takes for your beneficiaries to receive their money.
Check out our guide on life insurance and tax for more information.
Myth #6: I don’t need life insurance because my employer gives me cover
Some employers may provide life cover as an occupational benefit. However, even if this applies to you, it is still be a good idea to consider whether it meets your personal protection needs. For example it is unlikely that you will be able to choose the amount of protection and it may not cover your partner.
You should also consider what would happen to your Death in Service cover should you lose your job. Read our guide on death in service vs life insurance.
Myth #7: I will need annual health check-ups
Once you have your policy in place you will not be asked to provide annual health check-ups.
Myth #8: I need life insurance for a mortgage
You aren’t required to take out life insurance when you get a mortgage, but it may be a good idea. A mortgage may be one of the biggest financial obligations you ever take on, and so having life cover in place can give you peace of mind.
Check out our guide for more information about life insurance and mortgages.
Myth #9: I will need a medical examination to get life insurance
It depends on the individual, their circumstances, and the amount of cover applied for but in our experience, a medical examination is not always required.
Read our guide for more information on medical examinations.
Myth #10: The insurer will run a credit-check on me
Insurance providers don’t require a credit check to issue you with a life insurance policy.
Remember, the cover you choose will depend on your circumstances and needs. Find out more about the life cover products we offer.