Is Life Insurance Expensive and Worthless (plus 7 other myths you need to hear)
One of the most popular searches around Life Insurance is ‘is Life Insurance a scam?’ If you Google it, you’ll get a whole bunch of results – some of which include helpful articles on spotting or avoiding such a scam.
Other results include stories like this one about a former insurance agent who was sentenced to life in prison for convincing senior citizens to purchase annuities and then keeping the money for himself.
The culprit was sentenced in Swisher county, Texas, where he was ordered to pay over $800,000 to his victims. It’s all very American – but it’s also a case of a lone ranger going rogue to fleece vulnerable victims.
The vast majority of the time, Life Insurance is a fair deal.
We’re all about honesty here at lion.ie so let’s take a crack at some of the biggest myths surrounding Life Insurance.
1. Are Life Insurance policies a scam?
So just to expand on the point above: some people are thieves and scammers. Yer man above stealing from vulnerable older people is a scammer.
However, 95 percent of Life Insurance claims are paid out every year.
95 percent.
Those are pretty good odds.
When the insurers refused a claim, generally, it comes down to the applicant, who may have downright lied or forgotten about that time they spent weeks in the hospital – and to be fair, there’s not much the insurer can do in that instance.
Basically, don’t lie on your insurance forms, folks.
Now, under this umbrella is the topic of Reviewable Whole of Life policies, which get a bad rep because they can be expensive and they’re not right for everyone. In theory, they’re the bee’s knees: an insurance policy that will last as long as you live.
But there’s a kicker: the insurer can review and increase your premium over the term of your policy so some policyholders have seen the cost of their premiums rise by hundreds of per cent as they get older, just when they need cover most.
Which is pretty crappy.
AVOID!
You can read more about the different Whole of Life policies over here. The big takeaway is that Whole of Life policies are much fairer now, the best kind is a mixture of regular Life Insurance and Whole of Life, so it’s more expensive than term life insurance to begin with but eventually, you will end up with whole of life cover that you don’t have to pay for!
If you’re not sure whether to get Term or Whole of Life, give me a bell on 057 93 20836 and I can talk you through the pros and cons of each.
Or if your budget is tight, be aware that the whole of life insurance is 15x the price of normal term life cover which brings us nicely to “is life insurance expensive?”
2. Is Life Insurance Expensive?
Okay, sooooo this one technically isn’t a myth. It’s more a question of relativity, though not the kind of relativity that that Einstein fella was known for.
If you earn €100k and I quote you €100 per month, it’s relatively inexpensive, but if you earn €30k then €100 per month may be outside your budget. There’s an easy way around this, reduce the amount of cover you’re applying for and you’ll see your premium tumble.
Life Insurance isn’t much use to you when you’re alive and well. Of course, it’s not – because that’s the point. It will be invaluable, though, if you were to pass away, especially if you’re leaving behind a young family who’d struggle financially without your income.
There’s no sugar-coating it: we’re all going to die one day and Life Insurance will make your entrance into the big sleep that bit easier for your family.
3. Do you need life insurance if you are young, debt free and single?
It’s true that Life Insurance makes more sense if you have kids or a partner, but you’d be surprised how helpful it’ll be for family members when it comes to paying for your funeral or footing any bills they are left with.
And that’s before I mention your debts that’ll need to be paid off too.
Most importantly, if you are renting, you definitely need Life Insurance.
What if you died?
Could your partner afford the rent on your current four-bed detached or would they have to downsize and squeeze the kids into one room?
But to answer your question, if you have no debt and no financial dependents, buy wine instead.
4. Are you better off investing your money
In many ways, Life Insurance is an investment in your family’s future.
Now, of course, you could take up proper investing instead.
It could work out.
Bitcoin, property, NFTs.
However, every investment runs the risk of going up as well as down – and there could be the added hassle of tenants and the time that goes into nurturing your investment so it’ll grow into something that’s genuinely worth it.
Comparatively, the big benefit of Life Insurance is that your responsibility goes as far as telling the truth on the application form and then paying your premium.
After that, you’ve got guaranteed cover and have safeguarded your family’s future.
For most people, that’s the easier and safer option.
5. Life Insurance is a no-go if you’ve got a chronic illness
No way!
It’s actually pretty rare for Life Insurance applications to be rejected. But you may pay more for your cover if you have an underlying condition.
If you have a mild health issue like anaemia, you’ll get away with filling in a questionnaire and your premium won’t be affected.
For moderate conditions, like obesity, you’ll probably have to pay extra.
But for a serious condition like diabetes, the insurer will look for a doctor’s report from your GP and you’ll defo have to pay more than normal.
Other factors come into play as well, but generally, you should be able to get some kind of cover.
Chronic illness should not affect your chances of getting a mortgage for your dream home
6. You’re healthy; you don’t need a Life Insurance policy
So you run marathons/go to the gym/leap buildings with a single bound, and you don’t think you’re going to die anytime soon. Well, let me tell you, nobody ever does. I’ve yet to pick up the phone and have this conversation:
Nick : Hey, how can I help
Client : Hi, I need life insurance because I think I’m going to die tomorrow.
Life insurance lets you protect your family from the worst while you hope for the best.
7. Brokers are only out to sell, sell, sell
Like yer man I mentioned at the start of this blog, some people are dodgy and are out to make money without any morals. (Remember that time we bought a monorail?)
I’m sure there are bad apples in the Life Insurance industry too, but in general most are out to get you a good deal.
In fairness, you should be able to spot the dodgy ones, especially online.
Crap stock photos of The Team
No further detail on who The Team are. This means you’ve landed on a lead generation site that will farm your details to numerous brokers (expect a hard-sell call or ten)
Ridiculous claims like “we won’t be beaten on price” even though they can’t give you a price until the insurer underwrites your application!
Just like when you’re researching anything online, use your common sense, if there is a bang of shenanigans off it, click away.
Over to you…
If you’d like me to make a recommendation on the types of cover you should consider based on where you are in life, please complete this questionnaire and I’ll be right back.
Why should you trust us?
Did I mention we just won the Irish Protection Broker of the Year 🏆
Thanks for reading
Nick
