Life is moving at a fast rate, and while the thrill of the unknown makes it more adventurous and fun, we must make arrangements for the future and the ones we love. Insurance is considered the most common way to protect our life and the standard of living. Insurance indemnifies you for unwanted happenings and uncertainties. However, it is important to clarify what truly encompasses an insurance policy.
Many myths surround the insurance industry. They are often false and can be very confusing to people who are unfamiliar with them. Insurance myths should be busted because they can cause confusion and prevent people from purchasing the necessary coverage. So, let’s bust some common myths about different insurance!
Health Insurance Myths
With rising health costs, incidences, and increased hospital visits, health insurance has become one of the most crucial insurance that cannot be taken for granted. However, there are quite a several health insurance myths that follow now and then. Let’s briefly examine the most common ones:
Myth 1 – The youthful and healthy needn’t bother with medical coverage.
Fact – This is absurd to think that health insurance is only meant for older adults. Life comes with uncertainties, and you may not be aware of future events. It is always an impromptu move to have insurance, irrespective of age.
Myth 2 – The least expensive health plan is the one with the least monthly/annual premium.
Fact – Most of the time, a lower premium will mean lower benefits. Although selecting a plan with a lower premium might reduce your initial expenses, it might drastically increase your out-of-pocket expenses during the time when needs arise. Different insurance plans are suited for different individuals. Depending on your needs, having a higher premium plan that provides more comprehensive coverage might be more suited than a low premium plan that provides less coverage.
Myth 3 – The advantages of an insurance policy start from the day of procurement.
Fact – Each protection strategy has a holding up of around 30 days, changing from approach to adaptation. No illness or sickness is secured inside this holding-up period other than hospitalization imputable to a mishap. Health insurance can help in saving taxes. Some health insurance also covers maternity to an extent (there are waiting periods) though this is not an unfortunate event. In the end, health insurance is important to protect you financially from an unfortunate hospitalization.
Myth 4 – Health insurance only covers physical health care.
Fact – While health insurance is primarily used and marketed for covering physical health care, it should be well noted that many plans are now including mental health as well in their insurance policies. Also, if you’re interested in alternatives to traditional medicine, many health plans provide other options for care, such as acupuncture, holistic treatment, or chiropractic services.
Myth 5 – Everything is paid if you have Insurance.
Fact – This myth is observed in medical insurance, and insurers believe the insurance company will cover all the healthcare expenses. But the reality is that besides a handful of insurance plans, most health insurance plans pay only at the moment when there is hospitalization. Many other clauses and policies (such as co-pay, existing disease policy, etc.) might increase your out-of-pocket expenses.
Myth 6 – If your company covers you with health insurance, you don’t need another policy.
Fact – Your company might only cover you till you are employed with the company. In most cases, your policy will get terminated shall you leave or retire. Owing to situations like a slowdown, cost-cutting, and financial upheavals, your employer, might reduce the benefits or even cancel your policy. If you can afford your own health insurance policy, you should definitely consider getting it.
Life Insurance Myths
Life insurance is a product that can help you manage your financial and family security. However, many myths about life insurance make people hesitant to buy it. This section will bust some of the most common myths about life insurance. We will talk about the importance of life insurance and how it can help you manage your financial and family security.
Myth 7 – Life insurance is only for the wealthy.
Fact – This myth is wrong because life insurance is universal. All people need life insurance to reduce their risk of a financial crisis. This includes the upper-middle class and wealthy individuals as well as people who are in lower-income brackets. Some of the most common reasons those with lower incomes cannot buy enough life insurance are not being able to afford a good financial advisor, not having a steady income, or not understanding what type of coverage they are buying. However, with proper research and advice, you can buy a relevant life insurance policy too!
Myth 8 – Life insurance is too expensive.
Fact – This myth is wrong because life insurance can be purchased in many different ways. You can buy inexpensive term-life insurance or more expensive permanent-life insurance, with each option offering a different level of coverage and price. With the right type of life insurance, your financial and family security will be insured for a considerable period of your lifetime.
Myth 9 – Life insurance isn’t worth it if you are already young
Fact – This myth is wrong because you need to consider the financial aspect of the insurance. Life insurance taken out when you are young maybe even more worth it because you lock in relatively low premiums for the rest of your life. With increasing age, the premiums also increase; thus, locking in a life insurance contract at a young age might turn out to be a very wise financial decision.
Myth 10 – Life Insurance is unnecessary if I already have a pension.
Fact – This myth is wrong because, unlike a pension, life insurance provides financial security for your family in case you die. The money from life insurance is used to provide some much-needed relief to your loved ones, such as the cost of education, college, or home.
Myth 11 – Life insurance coverage is useful only for breadwinners.
Fact – Life insurance can be equally important for non-earners too. Take, for example, a homemaker. The cost of replacing the services formerly provided by a deceased homemaker can be much higher than you think; in this case, insuring against the loss of a homemaker may make a lot of sense.
Auto Insurance Myths
You must have heard, “You’re unlikely to get caught, and even if caught, it’ll just be a fine and one or two points on your license, which is much cheaper than car insurance. “ This is certainly never true. Let’s bust a few more myths related to Car Insurance.
Myth 12 – Premiums are excessive in car insurance compared to other insurance policies.
Fact – This is not true. On average, most auto insurers’ standard markup rate is about 5%. And that includes all investment income, including interest earned on the insurer’s funds. Moreover, auto insurance rates in most states are subject to government approval – rates must be filed with the State Insurance Department before the insurance company can use them. And those “rate filings” are subject to review by the Department’s actuaries. So you don’t have to worry about overcharging.
Myth 13 – If another person drives your car, their auto insurance will cover the damages in case of an accident.
Fact – In most states, the auto insurance policy which covers the vehicle is considered the primary insurance. So, the car owner’s insurance company should pay for damages, regardless of who is driving. It is advisable that you understand the rules of your policy before allowing another person to drive your car.
Myth 14 – There is some sort of “bank” with the individual insured’s name in the car insurance.
Fact – If a person pays their premium and no claims arise, the amount would go in vain. The premium paid for car insurance should never be considered an investment.
Home Insurance Myths
Many home insurance companies worldwide and hundreds of property & casualty insurance companies sell homeowners, fire, or dwelling insurance. Each of these can do business in up to 50 states and have different rates depending on the state, municipality, risk location (including distance from shore and a fire hydrant), property size, type of roof, etc. Let us talk about a few myths related to home insurance.
Myth 15 – An “All-risk insurance policy” covers everything. You don’t need to look any further.
Fact – There are always conditions and explosions. Insurance doesn’t cover everything. Buyers must be aware of the clauses of the insurance company before buying it. Read the inclusions and exclusions part carefully, along with the remaining documents.
Myth 16 – You should always insure your home for its market value.
Fact – This is certainly not a requirement and nor the best option. This is because your home’s market value and replacement value are not often the same. For example, your home’s current market value might be $600,000, but it might only cost $250,000 to rebuild it; in this case, you will be paying an unnecessary extra premium for more coverage.
Smartphone Insurance Myths
While buying a smartphone, you will get a window wherein you can select if you want to buy insurance; the same is called extended warranty protection insurance. This can be very useful as it will protect you from theft, breakage, and any defect in manufacturing. So, let’s look at some of the most popular myths related to smartphone insurance.
Myth 17 – You can’t insure your smartphone anywhere you want; it is a complicated process.
Fact – You can insure your smartphone from any outlet of the purchased brand. Even if your network carrier also provides you with smartphone insurance, the premiums quoted are often more expensive than standalone insurers.
Myth 18 – Taking a claim for your insured smartphone is like returning to the grindstone.
Fact – In most cases, It’s completely cashless; simply, a job card is required from your authorized service center. In the case of insurance provided by your network carrier, the process might be even simpler (although the insurance premiums are slightly more expensive if you insure through your network carrier.)
Some Final Thoughts
The above-mentioned insurance myths have been circulating for a long time, and many people are glued to this system of thinking. It is vital to propagate reality before reaching conclusions backed by people’s thinking processes. These myths prompt us to look for the negative aspects of having insurance. For example, a popular narrative is that you don’t need life insurance if you are single and don’t have dependencies, which is not true for several reasons.
Various online and offline platforms provide optimum knowledge and quotation of insurance policies. One must go through all these before opting for an insurance plan. The most challenging part is being aware of the importance of different insurance in your life.