Insurance is the one product that you buy and you hope you never have to use. With the possible exception of medical insurance, most insurance is designed to help you out in the event that bad stuff happens.
Today, you can get insurance just about anywhere. You don’t necessarily get it from a local insurance agent. You might get online insurance quotes, for example, and never talk to an agent. There’s nothing wrong with that, in itself, but it means you need to do the legwork of consumer education on your own.
Here, then, are the top 10 insurance myths you should watch out for:
- 1. You need insurance for every possible disaster. This just isn’t true. If you can pay for a loss or damage without financial hardship, you don’t need the insurance. Same is true if the risk doesn’t outweigh the cost of the premium.
- 2. Everyone needs life insurance. Life insurance is supposed to take care of your dependents after you die. If you don’t have dependents, you probably don’t need life insurance.
- 3. Only the primary breadwinner in the home needs life insurance. Even the stay-at-home dad should be insured. Childcare is expensive, as is housekeeping, food preparation and transportation.
- 4. Whole life insurance is the best type because you get your money back. You don’t get much back, truth be told. You’re better off with a term life insurance policy and separate investments.
- 5. Flood insurance is only for high risk areas. Even if your area is low risk, you may still consider it if you live in a NFIP area.
- 6. Your car insurance covers your family while doing business. If your teenager uses your car for pizza delivery, you may still need extra coverage.
- 7. Disability is unnecessary because of Social Security. If you do get approved for Social Security after months of waiting, it probably isn’t going to match your salary.
- 8. If I need to have care when I’m elderly, the government will pay for it. Do you really want to put your eggs in that particular basket? You’re much better off with long term care insurance.
- 9. Umbrella coverage is for the wealthy only. Umbrella insurance gives you extra liability protection beyond just homeowners, auto and boat insurance, and it doesn’t cost as much as you might think.
10. Not having medical insurance doesn’t affect anyone else. If you wind up in the hospital and need care that you can’t pay for, it will affect everyone else in increased health care costs.
