Life insurance can feel confusing. And with so many opinions floating around, it’s easy to buy into some misleading beliefs that may put you off getting important financial security for your life and loved ones.
Let’s clear up five common myths so you can make confident, informed choices.
Myth #1: “I’m young and healthy – I don’t need life insurance.”
Truth: Life insurance might not be on your radar when you’re young, but there’s plenty worth protecting. Your income, ability to pay rent and cover your debts, and even your future plans are worth insuring. Think of it as a way of supporting yourself and the people who rely on you, both now and into the future. Starting early can also make things more affordable, as your health, lifestyle and other factors are assessed at the time you take out your policy.
Myth #2: “Life insurance is too expensive.”
Truth: Life insurance can be more affordable than you think. Premiums are based on things like your age, occupation, gender, health, lifestyle and the type of cover you choose. There are many ways to manage the cost to suit your budget, such as adjusting your level of cover, paying at a frequency that suits you or considering what policy best suits your needs. Some insurers even offer discounts for healthy living or holding multiple policies.
Myth #3: “I’ll only get the money when I pass away.”
Truth: Life insurance isn’t just about death. It can also include cover for Total and Permanent Disability, Income Protection and Critical Illness. These types of policies can provide support if you’re injured or unwell and have to be off work – either temporarily or permanently.
Myth #4: “I can’t get life insurance because of my health.”
Truth: A pre-existing health condition doesn’t necessarily mean you can’t get cover. Insurers might ask for extra information about your medical history or apply a loading or exclusion, but you still may be eligible to take out a policy. This process is called underwriting. Depending on the nature of your condition, an Insurer may even review your disclosures and offer you cover on standard terms. We are all unique and every case is different, so it’s worth exploring your options.
Myth #5: “Life insurance companies don’t pay out anyway.”
Truth: Most claims are, in fact, paid. For example, according to the Australian Prudential Regulation Authority’s data from 1 Jan 2024 to 31 Dec 2024, the average claims acceptance rates1 paid by the top ten Australian life insurers for life insurance products purchased through a financial adviser were as follows:
- Death cover – 96.9%
- Total and Permanent Disability cover – 83.8%
- Income Protection – 95%
- Trauma (also known as Critical Illness) cover – 85.4%%
Life insurance can be a vital part of your overall financial plan, giving you peace of mind and financial security so you can continue living the life you’ve planned. It’s always worth exploring the options available to find a solution that fits your unique needs and goals.
To discuss your life insurance needs, book a time to chat, and we’ll talk over what’s best for you.
Reference:
1 https://moneysmart.gov.au/how-life-insurance-works/life-insurance-claims-comparison-tool
Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it, you should consider its appropriateness for you, having regard to those factors. Before making any decision a copy of the Product Disclosure Statement (PDS) and applicable Target Market Determination (TMD) should be obtained from the issuer and read prior to making any decision to acquire or continue to hold any financial product.
