One common myth is that buttered toast always falls butter-side down. Another is that if you pick up that toast faster than the Flash, or in less than five seconds, you can eat it. (Dirt and bacteria surely need more than five seconds to adhere to tasty, buttery goodness, right?)
Myths are part of every culture on earth; some we have inherited from the beginning of humankind, others we have made up along the way. But what is the purpose of a myth? And why, if we know that they are incorrect, do we keep believing or repeating them?
These are tricky questions better left for a scientist, possibly a sociologist, to research and answer. In the meantime, we set out to gather as many life insurance myths as we could from past articles that have published on LifeHealthPro and the Web at large. Without further ado, here are some myths and bizarre beliefs about the insurance industry. You never know: The next prospect you meet might be suffering from one of these faulty assumptions.
Myth: Owning a life insurance policy is expensive.
Status: Debatable
Ask your clients: How much do you value your peace of mind? Would your loved ones be OK financially if you were gone? As our former editor in chief and friend Bill Coffin wrote in his column, Finding Meester: “You buy life insurance for one reason and one reason only, really: because you love somebody. And yeah, selling life insurance is about putting bread on your own table. But it is also about making sure that the love of those who have passed on makes its way into the hearts and into the hands of those they have left behind.”
Each client’s needs are different and the insurance policy should reflect that. More robust coverage is usually more expensive. But generally it is possible to find coverage that fits any price point. Just make sure to listen to what your client is asking you and needs from you. Price shouldn’t discourage them, but it’s also important to remind them that sometimes you get what you pay for.
Myth: I don’t need life insurance.
Status: Busted!
No one wants to think about their own mortality, no one. But, for all of us, there’s a time for life to end. Many of us wonder if it would be better to know the exact date and time of our departure from this life: would that help ease the fear of death, would that make us live our lives to the fullest today or help us plan better before the fated day comes?
Ask your clients if someone close to them has died, recently or in the past, and most of them will have a story. We all do. But, ask them again: “Did the departed have life insurance? What happened to the family left living?”
One of the many stories that tugs at the heartstrings is Lissete Montes de Oca’s family, who lost their dad to leukemia. If it wasn’t for his long-term care policy and life insurance, the family’s future would’ve been uncertain. “Life insurance is something you pay for, but never expect to use. But here I am, and I can’t imagine not having this support to help me through,” she told LifeHealthPro back in August.
Myth: Once you buy a life insurance policy, set it and forget it.
Status: Busted!
A lot of people think they can buy a life insurance policy, store it in an archive somewhere in their home office and forget about it. Wrong! Clients and prospects need to know that they should revisit their policies annually or upon major life events, such as buying a house, getting married, or having a child. If the client’s health changes suddenly, they might consider changing their policy as well. This is crucial to ensure that the coverage is appropriate.
“A $1 million dollar policy may seem like a lot, but if you have a spouse and two young kids who aspire to college someday, and you have some debt, $1 million may not get them very far,” wrote Emily Holbrook, executive managing editor for National Underwriter Life & Health and our markets channel editor here at LifeHealthPro.com, during our coverage of Life Insurance Awareness Month back in September.
Another point that you should communicate clearly to your clients is that the policyowner must let their beneficiaries know where the policy is, its details and who to contact, in case they have to claim it. A dusty paper stored in the archive at the back of the home office might not be found for years after a life-altering event like the death of the policyowner. Or what if the client has a permanent life policy and he and their beneficiaries want to take advantage of the “living benefits” to pay off medical debt? The first step is knowing the policy details.
Myth: Having insurance through my employer is enough because people rarely use life insurance, anyway.
Status: Busted!
The answer to this myth depends heavily on the type of coverage your client’s employer provides. As we have covered before, some employers only offer between one and three years’ salary, which might not be enough for your client’s family.
As for the second part of this myth, ask your client or prospect again: Do they know anyone who passed away and had life insurance? This myth persists in our society because people don’t want to talk about their finances or death. Both are very tough, uncomfortable topics. But it is important to have these conversations. There is always comfort in knowing that others have gone through difficult situations and have come out the other end being able to stand on their own two feet due to their insurance coverage.
If your client or prospect is still not convinced, it’s time to bring out the big numbers:
– $1.5 billion is paid out by the life insurance industry every day through payments from life insurance, annuities, long-term care insurance, disability income insurance and deposit funds used for retirement.
– 75 million American families, or 2 out of 3, depend on the life insurance industry for financial and retirement security.
Myth: I’m young (and/or single) and don’t need it. Life insurance is for older people.
Status: Busted!
Your client might be “young,” but accidents and illnesses don’t discriminate because of someone’s age. Geico makes a good point about this on their page about myths: “Young people are more likely to have small children, big mortgages and little savings — setting themselves up for financial disaster in the event of a loss.”
The insurer also notes that even if your clients are single, unmarried or don’t have kids, they should get life insurance to lock-in “the best possible rates,” You will get the best deal on life insurance while you’re young, and you won’t stay young forever. Let your clients and prospects know this.
Myth: I can lie about a medical condition to get the best rates.
Status: Super busted!
Lying never works, not in relationships, not with the IRS, so what makes anyone think that lying to get a better rate on a life insurance policy would work? Eventually, the truth will come to light and your client’s coverage or claim might be denied. Be clear and upfront about this with your clients. For healthy clients who are fighting a challenging family medical history, let them know that specialty policies like cancer insurance or critical illness insurance can help protect them in case of serious illness.
Myth: The Internet offers the best deals.
Status: Busted!
As with anything these days, the Internet provides great tools for education and research before taking the plunge and spending well-earned money. What your clients will be missing out on is having a real-life person who will listen, understand and process all the information to really meet their needs (which is you, of course). Plus, an advisor or agent can help clients understand all of the confusing insurance lingo out there; an automated, fill-in-the-blanks computer form can’t provide that expertise.
About the perceived pricing advantage, an article about insurance myths on Forbes says that when it comes to prices, they will be pretty much the same whether a client purchases online or with a human being.
Questions? Contact Nick@agent-link.net
