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Debunking Life Insurance Myths

12 April 2021 Standard Bank

Getting life insurance usually is straightforward. You are advised to do as much research as possible and gather quotes from different insurance companies to learn what is most suitable for you and your lifestyle.

Life insurance covers helps us get through unforeseen circumstances and so, it makes sense that you would have life insurance – to protect your most important asset – You. So many people are put off on getting life insurance and being covered adequately, often because of what they have heard about life insurance policies.

“While there are well-known tips for saving on life insurance, a good first step is to be accurately informed,” says Felix Kagura, Head of Long-Term Insurance at Standard Bank. “There are a lot of myths out there about what impacts life insurance rates, debunking some of those myths upfront will not only help customers to be WalletWise, but will also help ensure they are properly protected.”

Standard Bank is shedding light on five common life insurance myths and misconceptions, helping to make life insurance surprisingly painless by clearing up some of the confusion and helping you to be WalletWise.

Myth 1: I am single, or married with no children, so I do not need Life Insurance
Even if you do not have a spouse or dependents, life insurance can be used to help your loved ones pay off your debts in the event of your death. Consider debt such as your mortgage or your car loan. Planning early can help protect your loved ones from burdensome expenses.

Myth 2: I cannot afford Life Insurance
Many consumers misjudge the cost of a term Insurance policy. Life insurance can be affordable for many people, depending on the type and amount of cover you are looking for. You can start with a policy that fits your budget, and you may be able to purchase an additional cover at a later stage in your life.

Myth 3: I am a stay-at-home parent with no income, I do not need Life Insurance
If you are a stay-at-home parent, you still matter. While you may not bring in an actual paycheck for the household, you likely provide services that could cost a lot of money to replace each year. These may include childcare, daily transportation, home maintenance and cooking, to name a few. If you were to pass away, life insurance may help cover some of these costs.

Myth 4: I have a comfortable amount of savings, so I do not need Life Insurance
While your savings may last through your retirement, have you thought about final expenses? If you don’t have enough money saved when you pass away, your loved ones may have to pay for your funeral costs. Another thing to keep in mind is your mortgage. If you do not have enough in savings and your mortgage has not been paid off, your loved ones also may not be able to hold onto your home. A life insurance policy’s death benefit can help alleviate some of this burden after you die.

Myth 5: I do not need Life Insurance once my children are adults
Life insurance can help you in many different stages in life. Having life insurance later in life has a number of advantages, such as helping to relieve the responsibility of paying for final costs, paying off debt you may have left behind, or simply leaving your children with an inheritance.

“We would like to encourage customers to be WalletWise and make better informed decisions when it comes to getting insurance so they can feel more confident about protecting their family,” concludes Kagura.

Quick Polls

QUESTION

Financial behaviour experts suggest that today’s risk modelling methodologies ignore your client’s emotional ability / behavioural capacity. What are your thoughts on spicing up risk profiling tools to make allowance for your client’s financial behaviours

ANSWER

[a] Bring it on; my client’s make too many irrational financial decisions
[b] Existing risk profiling tools are adequate
[c] Risk profiling tools should be based on the model / rational client
[d] The perfect risk profiling tool is science fiction
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