Life insurance is a fairly straightforward financial product. Nonetheless, there are numerous myths about its purpose, features and cost. We asked several advisors about the myths they encounter and their reactions to them.
1. “I don’t believe in life insurance.” This myth is based on doubts that life insurance has value, and the prospect will encounter a situation where he or she might benefit from the coverage. There’s often something deeper behind that myth, says Matt Dobbie, president and CEO of uFinancial, a MassMutual agency in Camp Hill, Pa.
“I think part of that myth comes from the fact that clients struggle with the reality that something can happen, and if it does, there are people in their lives who will be negatively impacted,” Dobbie says.
2. “Seniors can’t get life insurance at a reasonable cost.” It’s easy to understand this myth’s origins. Fran Jacoby, CLU, ChFC is a financial planner for Prudential in Indianapolis who encounters this notion frequently.
“When they reach, let’s say, 60-years-old, they think they can’t get life insurance at any reasonable cost,” she says. “They just believe it’s so expensive that they don’t want to think about it. [But then] they see that actually premiums are really quite affordable and that you can get life insurance at age 60.”
Seniors also start worrying they can’t qualify for coverage.
“If your blood pressure is medicated and you are stable, we’re more than happy to give you really good rates” Jacoby says. “But people automatically think ‘I have high blood pressure. That’s a major illness; they won’t give me any coverage.’ But that’s not the case at all.”
3. “I can’t afford it.” This myth forces an advisor to get creative in freeing up resources. That may require reviewing the client’s budget, restructuring their debt, determining if they have nonproductive assets or reducing their tax liability to free up cash flow.
“A good financial advisor will help you find the dollars,” Dobbie says.
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Ed McCarthy has worked as a freelance writer and author since 1991. His specialty is explaining complex financial topics in understandable language. Before becoming a writer, he worked as a financial advisor and he is still licensed as a Certified Financial Planner.