10 life insurance myths busted
Life insurance is not necessarily a topic we want to think or talk about, but the reluctancy may be fuelling several myths around the topic.
To help separate fact from fiction, and to ease your mind when you are thinking about taking out a policy, Legal and General are sharing the most common life insurance myths, and the actual truths around them.
Myth 1: Life insurance is only for the main breadwinner
Even if you are not the primary earner for your household, your death could still have a big financial impact on your family. For example, if it is your main responsibility to look after the kids, the life insurance payout could cover childcare costs when you are gone.
Myth 2: Young people don’t need life insurance
You do have to be 18 to take out a policy and most people do opt to get life insurance when they have financial dependents, but this could happen from a young age. Not to mention life insurance is cheaper when you are younger.
Myth 3: Insurers don’t pay out for life insurance
As long as a valid claim has been made a payout will be processed. However, all the criteria do have to be met, for example the premiums paid, policy must be in force and the information provided must be accurate.
Myth 4: Life insurance is too expensive
Legal and General’s life insurance policies can start from £5 a day, and ultimately not having life insurance may cost you more in the long run.
Myth 5: Life insurance payouts are always taxed
Life insurance payouts are exempt from Income of Capital Gains Tax, but depending on the value of your estate when you die, the payout may be subject to Inheritance Tax. However, placing your policy in trust should help ensure the life insurance payout would not be of the estate, helping to minimise Inheritance Tax.
Myth 6: I don’t need life insurance because I get it through work
Some employers may provide life cover, but it is important to check if this covers your personal protection needs.
Myth 7: I will need annual health check-ups if I get life insurance
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 will not normally be required to take out a life insurance policy when you apply for a mortgage. However, as it is such a large financial obligation it may be a good idea to take out a policy, to protect your loved ones.
Myth 9: I will need a medical examination to get life insurance
It is dependent on the individual, their circumstances, and the amount of cover they applied for. Legal and General does not always require a medical examination to take out a policy.
Myth 10: The insurer will run a credit check on me
Insurance providers don’t require a credit check before they offer a life insurance policy.
Make sure you have cover if you need it
With these misconceptions cleared up, we hope this brings peace of mind to anyone who is thinking about taking out a life insurance policy or educates those who may not already have a policy or think they need a policy.
