There are many myths and misunderstandings surrounding life and health insurance. This often leads to inadequate insurance cover.
In this blog, we look at some of those misconceptions so you can make informed decisions about the type of policy or policies you need.
Myth 1: Life insurance is only for the elderly
Many believe that life insurance is something only senior citizens take out. In truth, it is prudent to take out life insurance when younger. Not only are premiums typically lower, it provides peace of mind that your loved ones are financially protected in your younger years. In effect, it is a job done and one less thing to think about.
Myth 2: Critical illness cover and income protection are the same
While both income protection and critical illness cover offer financial support should you suffer from an unexpected illness or injury – with no restrictions on how the money is used – the policies are very different from one another in that they each apply to different circumstances.
Income protection pays out a percentage of your salary regularly if you can’t work due to illness or injury, in effect, bridging the gap until you return to work.
With this kind of policy, more conditions and injuries tend to be covered.
Critical illness cover pays out a one-off lump sum should you be diagnosed with, or undergo surgery, for, an insured potentially life-threatening illness – regardless of whether or not you are forced to stop working.
With this type of policy, you have the peace of mind that, should you experience this type of poor health, you will be able to focus on your treatment or recovering rather than worrying about the financial implications of not being able to work.
Myth 3: Employer-provided insurance is always enough
There are several reasons why employer-provided insurance isn’t always enough. Firstly, employers own and pay for the insurance. This means they decide the level of cover. An employee has little to no say on their coverage.
Another issue is that there is what’s known as the deferred – or waiting – period. An employee must be incapable of working through illness or injury for a set period before their claims are paid. This could be set at anything from seven days to a year. Employers get to choose how long this period is – the longer this period, the lower the monthly premium.
In addition, an employee isn’t covered once they have left the company. With premiums increasing as we age, locking in good insurance cover earlier can be a good move.
