Dispelling insurance myths can be just as beneficial to your clients as filling them in on coverage details in the first place. All too many individuals make serious insurance decisions under false impressions and with mistaken beliefs, so it’s essential for financial professionals to cut through the misinformation.
Life insurance
Regardless of the policy, fear of high costs will no doubt be in the minds of many clients. In fact, data from the 2014 Insurance Barometer Study from Life Happens and the Life Insurance Management and Research Association shows that 63% of Americans are not obtaining the coverage they need because they believe it’s too expensive. However, the same report illustrated that 80% of people overestimated the cost of coverage.
Another myth to dispel are fears of not qualifying for coverage due to health conditions. It’s up to insurance producers to let their clients know there are options available. In fact, some carriers may even specialize in high-risk policies for these individuals. Meanwhile, policies that are not medically underwritten also exist, albeit with higher costs and lower coverage limits. The point is: There’s no reason why someone with a medical condition should go through life without financial protection for their loved ones.
Age often plays a role in mistaken beliefs regarding life insurance. After all, even older clients may feel as if they’re in the prime of their lives, with death the last thing on their minds. This could lead them to think life insurance is something they don’t need to worry about until somewhere down the line. However, as producers well know, life insurance becomes more expensive the older someone gets, which is why it makes sense for clients to obtain a policy sooner rather than later.
Long term care insurance
Life insurance is far from the only area where myths may continue to give clients the wrong idea. First and foremost, many clients may believe the likelihood of their needing long term care in the future is low. However, data shows that 68% of men and 79% of women will require long term care. Additionally, this need isn’t a temporary cost. Figures show that, on average, men will require 2.2 years of long term care and women will need 3.7 years’ worth.
Another common myth surrounding long term care is that Medicare will pay for it. However, clients need to be made aware that help with day to day tasks is not what Medicare is designed to provide financial assistance for. Medicare will only help pay for long term care in very specific circumstances, and only then for limited periods of time.
Some clients, especially those with high net worths, may believe they can pay for long term care on their own. While this could be true, they may not fully understand how expensive this type of care can be.
According to data from the University of Minnesota, help with daily living activities can average anywhere from $31,200 to $87,235 per year depending on whether a person receives care in their home or in a dedicated nursing facility.
