10 Things We Bet You Didn’t Know About … Life Insurance

If we're to be honest, there are more than ten things we don't know about how people view life insurance.

After hearing stories of how life insurance aided families following the deaths of loved ones—like how it supported an expectant mother who was suddenly widowed—we know that life insurance can mean the difference between a tragedy and a tragedy with a recovery plan.

That's why LearnVest teamed up with Guardian Life Insurance to conduct a survey aimed at offering a comprehensive look at the attitudes and behaviors of men and women toward life and disability insurance.

We surveyed 797 people between the ages of 21 and 40, and since we're not stingy about our knowledge, we want to share the findings with you.

10 Things We Bet You Didn’t Know About Life Insurance

  • JrdnM

    This is scarily true. I’d like to see an article comparing term and whole. While I know the differences, it was presented to me by my Fidelity advisor why term is better and by my First Command advisor why whole was better. Both were trying to sell their product… how about a non-sales pitch! I can see advantages and disadvantages in both. 

    • laurashin

      Hi JrdnM,

      Our checklist on getting life insurance breaks down the differences: http://www.learnvest.com/knowledge-center/i-want-to-get-life-insurance/

      Laura

    • Eugene T Chu

      As a former First Command investor (switched to Fidelity), I would recommend term. I stupidly bought whole life insurance when I was younger. Had I bought term & invested the rest, I would have more than the pitiful cash value that I am surrendering my whole life policies for now.

  • Rob Drury

    Let’s address each of the above findings in order:
     
    1.       There has NEVER been a denial of a legitimate death claim against a US-based insurer.   If one is working with a competent advisor, one’s beneficiaries would know precisely how to file a claim.
    2.       Life insurance should be purchased as part of a comprehensive financial plan with specific objectives in mind. 
    3.       If life insurance fundamentals are not known by the buyer, it follows that the policy was purchased without specific objectives in mind.  Chances are that individual does not have the right type or amount of coverage.
    4.       Many aspects of life insurance are very simple, while others are extremely complex; but no matter how simple the product, pinning down what precisely is to be accomplished is always complicated.  Again, life insurance should only be purchased to meet specific objectives that complement other financial objectives.
    5.       Welcome to adulthood.  Be responsible.
    6.       Good for them, but this is only a start.  What happens when they leave their employer and replacing coverage is not a viable option, for either health or monetary reasons?  Also, being group coverage does not guaranty that it is either more cost effective or appropriate than other alternatives.
    7.       This is testament to the reality that people have very little idea of what they’re buying or why.
    8.       Everyone should be on the same page and communicating.
    9.       The good news:  They bought life insurance to help those they love.  The bad news:  They didn’t know how best to structure the plan.
    10.   Refer to #9.
     
    So, what’s the common element in each of these?  People saw a need to do “something,” but had little or no idea what they were doing.  Life insurance should only be purchased as part of a comprehensive financial plan under the supervision of a properly qualified financial planner or advisor.  Most advisors will do this type planning at little or no cost.
     
    Rob Drury
    Executive Director,
    Association of Christian Financial Advisors

  • Frankly

    when my parents died when I was 15, one of the things they left me was a life insurance policy they had been paying into since I was small.  As it was supposed to be a form of investment, I checked out the expected value when I would turn 65 – I think they quoted like $5000 which sounded like a lot 45 years ago – but then I calculated – after inflation, if I continued paying into this my entire life, the payout for my retirement would be enough for me to – put a deposit on a small car !

    I double-checked my assumptions and calculations – then cancelled the policy immediately.

  • http://quicktermpolicy.com/ Mark Hall

    I learnt by heart all 10 points. This is a good post which provide much more.
    Thank you very much.

  • Michel

    People would rather eat a live bug! Fascinating. I found the fact that first box on the percentage of people who don’t know how to collect benefits particularly alarming. Insurance companies, websites, blogs should be sharing more information on how to collect, and spread awareness about it, so people will at least know to look if a significant other has passed. Something we can include at accu quote too!