Life insurance: Myths and realities

 Myths and realities

Your Edward Jones advisor partners with you to understand your financial goals and helps you create a strategy to reach them. A complete financial strategy should not only help you reach your goals, but also protect your family and your financial future from unexpected events. Building a “what-if” clause into your financial strategy can mean the difference between successfully navigating life’s unexpected events or being overwhelmed by them.

Despite the importance of protection, more than half of Canadians (66%) do not own individual life insurance.1 Talking about your life insurance needs can be difficult conversation and there are a lot of misconceptions. Here are some common life insurance myths that you may hear, and the realities that go along with them.

Myth 1: “I have life insurance through my group plan at work, and it’s good enough.”

Reality: Group life insurance is generally easy to obtain, relatively inexpensive, and the process is often quite simple with just a few questions and no medical testing. However, the coverage offered through group plans is often inadequate and insufficient. This is because most group life insurance plans offer only a basic amount of coverage, typically one or two times your salary. While coverage can sometimes be increased, up to a specific limit, group coverage maximums are still insufficient for most situations. Furthermore, another key disadvantage of group life insurance is that it’s tied to the job – if you leave your employer, you lose the insurance. This poses a very significant risk and can leave you uninsured and unprotected at a time when it could be harder, and more expensive, for you to go out and purchase life insurance to protect your goals.

Myth 2: “Life insurance is just too expensive, and I just can’t afford it.”

Reality: Life insurance, and particularly term life insurance, can be very affordable. In general, the cost of a life insurance policy depends on several key factors, such as your age, health status and history, smoking status, gender, and the amount and type of insurance policy being purchased. For example, a 40-year old female non-smoker of average health, could generally acquire a $500,000 Term 10 life insurance policy for less than $30 per month. Indeed, for most people, it’s not that they can’t afford to buy life insurance, it’s that they can’t afford not to buy it. The protection can far outweigh the cost

Myth 3: “I have health issues. There’s no way I’ll get approved for life insurance.”

Reality: While some people do get declined for life insurance, the vast majority of applications are approved. Of course, if you have certain underlying health issues or a risky lifestyle, and therefore a higher likelihood of dying earlier, your premiums may be more than the standard amount. Or a policy may be issued, but with specific conditions, such as no benefit is payable if the insured dies during an excluded activity such as hang gliding or heli-skiing. In the case of a life insurance application being declined, the most common reason is due to the applicant’s medical history. But even in this case, it may still be possible to obtain “no-medical” life insurance, even if you’ve been declined elsewhere for medical reasons.

Myth 4: “I’m young and in good health. I don’t need life insurance."

Reality: Of course, this may be true for some – not everyone needs life insurance. And there are situations where life insurance may not be important at a particular time, but income replacement (disability) insurance might be. But many people, including those who are young and in good health, do need life insurance. For example, if you have a joint financial obligation with someone else, such as a mortgage, life insurance can help ensure that a surviving spouse or partner isn’t left with the burden of that debt. Remember, life insurance is often more affordable for those who are young and in good health. For this reason, even if you don’t have an immediate need but anticipate you soon will, buying life insurance at an earlier stage of life can be a great way to plan for the future.

Your first step is as simple as speaking with your Edward Jones advisor. Using our 5-step Process, your advisor can help you chart your goals into a financial strategy. And when you work with an Edward Jones advisor, you can feel certain that the recommendations made for you not only help you build for your future, but help you protect your future goals from being derailed.

1 LIMRA Individual Life Ownership Trends – 2019 Canadian Life Insurance Ownership Study

Important information:

Insurance and annuities are offered by Edward Jones Insurance Agency (except in Quebec). In Quebec, insurance and annuities are offered by Edward Jones Insurance Agency (Quebec) Inc.