The 9 Life insurance Myths

The 9 life insurance myths.

Be aware, you'll be hearing about insurance... for the rest of your life! Car insurance, home insurance, insurance for your student loans, your credit cards, your mortgage, your insurance at work etc. Want me to keep going?

With so many different types of insurance available, it can be very useful to have some basic information on hand to help you navigate through all the options available to you.

Let's demystify 9 of the most popular myths about life insurance.

1. All life insurance policies are alike

Nothing could be further from the truth.

Although the principle of life insurance in every policy is to provide a benefit in the event of death, certain terms and conditions may differ from one product to another, or from one insurer to another.

Also, it is generally possible to customize the overall coverage by adding riders (additional guarantees).

👉 Take advantage of the expertise of our advisers via our chat platform. They will be able to work with you to build a family protection plan tailored to your needs.

2. Life insurance is for life

Yes and no.

Chances are your family situation will evolve over the years. In fact, several events can have a significant impact on your life insurance needs. The birth of a child, the purchase of a new home, a change of career, a marriage, a divorce, etc. Therefore, over time, you may need to adjust your coverage. Fortunately, life insurance coverage is more flexible than you might think. You'll soon realize that life insurance can be summed up in two categories: temporary needs and permanent needs.

A temporary need is a need that gradually diminishes over time. The mortgage on a home is a good example because the payments will be higher in the early years, but will decrease considerably as the payments are made.

Also, the preservation of the family lifestyle is important to consider when you have children. This is because earned income is widely used to ensure a comfortable quality of life for the family. This should not be neglected in the analysis of insurance needs!

A permanent need is much easier to identify. It is mainly the expenses related to death, roughly $10,000, and any additional inheritance that you wish to leave to your family.

Be sure to include inflation in your evaluation. The amount of permanent life insurance related to death expenses will be higher for a person aged 25 than 75.

As my brother-in-law would say: time is money !

3. You don't need life insurance when you're young

Maybe, but...

We all know it's not exactly thrilling to pay life insurance premiums when you're young and healthy. It can feel like you're paying into a vacuum. And yet, there's no better time to purchase life insurance. But why is that? Simply because you're young and healthy! In fact, the best time to buy life insurance is before you need it.

As we get older, not only do premiums increase with age, but we are also more likely to develop health problems that could have a negative impact on the cost of insurance, and may even prevent you from obtaining certain products.

Still not convinced? Here's a second argument that is all too often overlooked. Your parents are getting older. We rarely give it any thought, but insurers do take into consideration our parents' medical history. A diagnosis in one of your parents can affect your insurability.

👉 Give it some thought and act on it sooner rather than later. Discover our article: 5 reasons to buy your life insurance now ⏱

4. There's no point in insuring my spouse because he/she doesn't work

Wrong.

Even if your spouse does not earn an income, his or her contribution to maintaining your standard of living is still quite valuable. In the event of his or her premature death, who would take care of the house, the upkeep, childcare, the cooking etc.? The loss of a stay-at-home spouse may not affect your income, but it certainly affects your expenses. Life insurance coverage is therefore appropriate, even if he or she is not earning an income.

5. You don't need life insurance when the kids have moved out

Wrong.

Even if your children are grown up and financially independent, they may still need financial support when you die. Think, for instance, of the debt you could leave behind in the event of your premature death, not to mention the funeral expenses your loved ones will have to pay.

Yes, needs change throughout a lifetime and are lower when the house is paid for and the children have left the nest, however, the need for life insurance to cover the many expenses upon death should not be dismissed.

6. I'm not eligible for insurance

Probably not true.

If you have health problems, you probably think you are uninsurable. Think again. Life insurance is probably still within your reach. Many insurers are willing to cover individuals with a variety of medical conditions. While premiums will be higher, you'll probably be able to find some insurance coverage when you need it most.

👉 Come and chat with one of our experts, they will be able to find the right fit for you and see if the Emma insurance is what you need.

7. Mortgage life insurance offered by the bank is mandatory

Wrong.

That's what they're trying to make you believe. 😱

This myth is undoubtedly one of the biggest aberrations on the market. Under no circumstances are you forced to accept life insurance, even if the request comes from the bank or cooperative that is financing your loan. Often, the premiums for loan insurance are fixed, yet the balance of the mortgage - the principal sum insured - decreases with each payment made. Note that the only beneficiary of this life insurance is the bank.

In fact, this type of coverage only protects the bank in the event of your death.

Some options offer you much more flexibility. It is considerably better (and cheaper) to take out life insurance online with a private insurer rather than your financial institution.

8. My mortgage life insurance covers all my insurance needs

Probably not.

It is true that for most families, paying the mortgage is the biggest monthly expense.

In that respect, mortgage insurance does indeed cover you. It is false, however, to think that you are 100% protected.

There are many other financial obligations that will have to be paid in the event of your death, such as outstanding loans or credit card balances. And that's not to mention funeral expenses and taxes upon death, both of which can be quite sizable.

9. My employer's life insurance is sufficient

Wrong.

Many companies now offer life insurance coverage to their employees in addition to their other group benefits. The amounts of insurance typically range from 1-4x annual salary. However, the coverage may not be enough to cover the entirety of your needs.

The coverage amounts offered can sometimes be interesting and give you the impression that your insurance needs are fully met, it may even be the case, for as long as you are employed!

However, it is a well-known reality that fewer and fewer people are going to maintain a 30-year career with the same employer. Your employer may also decide to renegotiate the contract with another insurer, thus modifying your benefits, potentially significantly.

A life insurance policy that is not part of your workplace package will provide you with the right amount of coverage for your entire life, regardless of changes in job or salary.