{"id":6530,"date":"2022-04-13T10:00:38","date_gmt":"2022-04-13T10:00:38","guid":{"rendered":"https:\/\/termlite.ca\/?p=6530"},"modified":"2025-11-19T21:50:38","modified_gmt":"2025-11-20T02:50:38","slug":"7-life-insurance-myths-debunked","status":"publish","type":"post","link":"https:\/\/cms2.dmatrixsoft.com\/termlite\/7-life-insurance-myths-debunked\/","title":{"rendered":"7 Life insurance myths debunked: facts that may surprise you"},"content":{"rendered":"

Insurance myths debunked by Termlite!<\/p>\n

A myth\u00a0<\/b>is a story, usually of unknown origin, repeated so many times that it became a general belief accepted by the majority. At TermLite, we aim to educate Canadians on life insurance<\/a>. In this article, we will debunk some common life insurance myths and misperceptions about the industry.<\/p>\n

Without further ado, here are eight\u00a0life insurance myths and facts<\/b>\u00a0essential to keep in mind before you\u00a0purchase life insurance<\/b>.<\/p>\n

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1. Life insurance companies find ways not to pay out<\/b><\/b><\/h2>\n

\u201cThose scummy insurance companies always find a way to avoid paying out a policy!\u201d<\/p>\n

Right? Well, not so fast. As long as the conditions in the policy are met (the insured has passed away, or was diagnosed with a critical illness<\/a>, etc) AND you\u2019ve presented all information truthfully, insurance companies are legally and morally obliged to pay out your policy.<\/p>\n

Let's go back a bit. Before\u00a0purchasing life insurance<\/a>, when you do ask for a quote, the advisor in\u00a0financial security\u00a0from the\u00a0insurance company\u00a0will have asked you a few questions about your\u00a0health\u00a0and way of\u00a0life: age, smoking status, medical history, etc..\u00a0Life insurance quotes\u00a0are based on the risk you represent for\u00a0life insurance companies\u00a0to ensure you.<\/p>\n

After those basic questions concerning your\u00a0health, you will eventually have to undergo a medical exam with traditional\u00a0life insurance companies.\u00a0This data helps the advisor determine the\u00a0premiums<\/a>\u00a0to your specific profile and the level of risk you represent to\u00a0cover.<\/p>\n

Here is one of the\u00a0real common misconceptions\u00a0about\u00a0insurance products:\u00a0some applicants may think they can lie about their\u00a0health\u00a0conditions<\/a> (current or prior), with no consequence regarding their\u00a0life insurance policy.\u00a0But a false declaration is considered fraud. When you sign the\u00a0life insurance policy, you permit the insurer to run a medical check.\u00a0In these specific cases of insurance fraud, the insurance company may refuse to pay out the policy.<\/p>\n

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2.\u00a0 Life insurance is a must-have investment<\/h2>\n

According\u00a0to traditional\u00a0life insurance companies, life insurance is a must-have investment. Of course, this is biased advice. That\u2019s not to say that you can\u2019t benefit with life insurance, however.<\/p>\n

Here is the second life insurance myth debunked: Your long term financial goals and your current level of financial security will determine if you need life insurance.<\/p>\n

A\u00a0life insurance\u00a0plan might not be necessary for someone who has no\u00a0family\u00a0and no\u00a0debt or ongoing expenses that still need to be paid after his or her death. However, most people do have family or loved ones they would like to leave a sum of money to in the event of their death.<\/p>\n

If you have\u00a0debts, you know it will\u00a0cost\u00a0your family a significant amount of\u00a0money\u00a0after your pass away. Like\u00a0most people, you may have a\u00a0car loan, a mortgage\u00a0<\/a>and\/or maybe\u00a0consumer debt. Even if you don\u2019t have outstanding debt, you may have ongoing expenses that will still need to be paid for after you pass: children, education costs, care for a parent or spouse, and liquid assets to keep a business running being the most common examples.<\/p>\n

Moreover, if you have not planned your funeral and\u00a0final expenses, then\u00a0life insurance\u00a0makes sense\u00a0for you and your\u00a0loved ones\u00a0to\u00a0cover\u00a0all your\u00a0expenses, debts or otherwise.<\/p>\n

Even if you have no\u00a0debt or outstanding expenses after you pass away, you may still want to leave your loved ones with a lump sum payment, whether as inheritance or even a charitable donation to a worthy cause. Life\u00a0insurance products (whole life\u00a0or\u00a0term life) can be a great tax-free way of leaving a financial legacy after you die.<\/p>\n

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\"cheap<\/p>\n

3. I should get the policy with the cheapest premiums<\/h2>\n

There is no one-size-fits-all when it comes to life insurance. Rather, the ideal policy differs for everyone.<\/p>\n

The most affordable type of\u00a0life insurance policy<\/a>\u00a0is\u00a0term life insurance. For many people, term life insurance can be ideal for their circumstances (cheaper does NOT always mean better or worse when it comes to coverage). But the cheapest solution might not always be the best for you.<\/p>\n

Let\u2019s quickly compare some of the types of life insurance policies and who would best benefit from them.<\/p>\n

Term life insurance<\/h3>\n

Generally considered the most affordable type of policy, young people<\/a>\u00a0tend to purchase\u00a0term life insurance\u00a0<\/a>to save\u00a0money\u00a0on their\u00a0coverage\u00a0and invest the difference into a high-performing product or\u00a0pay\u00a0their\u00a0mortgage faster. This kind of policy lapses after the duration of the term of the policy.<\/p>\n

Permanent life insurance<\/h3>\n

As the name suggests, unlike term life insurance, whole life does not expire. Many forms of permanent life insurance policies also have an optional investing component. Because of these factors, permanent life insurance is typically more expensive than term.<\/p>\n

Mortgage life insurance<\/h3>\n

Specifically meant for homeowners with an existing mortgage, mortgage life insurance<\/a> is designed to cover your mortgage repayments if you die. This type of plan\u2019s benefit can pay off your mortgage and allow your family to keep their home if something happens to you. Mortgage life insurance is a subset of term insurance.<\/p>\n

Though it may be tempting to buy the cheapest policy to save in the short-term, your ideal policy would depend of individual factors such as age, family situation, your\u00a0income to expense\/debt ratio, and the\u00a0financial goals\u00a0of your\u00a0family.\u00a0A licensed advisor will be able to give you expert, tailored advice<\/a>.<\/p>\n

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4. Only breadwinners need insurance<\/h2>\n

This is one of the\u00a0most common misconceptions, and a dangerous one. Even a homemaker may need\u00a0life insurance protection\u00a0for the\u00a0family. Why\u2019s that?<\/p>\n

A homemaker often provides household services that would be expensive to pay for otherwise. Here are all the\u00a0expenses\u00a0of a\u00a0family\u00a0that you should keep in mind for your\u00a0life insurance coverage.<\/p>\n