Insurance myths: Why Life & Disability Insurance are more important than you think
You insure your home, your car, and even your health—so why not your life and the income that supports it? Principal® breaks down 4 common myths about life and disability insurance.
Myth #1: I can do it myself.
The truth is, it makes sense to work with a financial representative. Here's why:
Financial representatives are trained to help you assess your insurance needs, your overall financial situation, your tolerance for risk, and the type (or types) of insurance that would be most appropriate for your unique situation.
He or she will help you understand the complexities of insurance policies and riders, and will help select the features and benefits right for you.
A financial representative may be a catalyst in the planning process, bringing together your other advisors (such as attorneys, accountants, etc.) to form a coordinated planning team.
He or she will complete the forms necessary to start the underwriting process and will arrange for any follow-up tests or exams that may be required. Then he or she will follow up with the underwriters to facilitate the process.
When the policy is issued, your financial representative will usually deliver it in person, explain the coverage, and answer any questions you might have.
He or she will continue to review your changing needs and will be available to help with any service needs that may arise.
In the event of your death or disability, your financial representative will be a great resource to your family, ensuring that your claim is reviewed for benefits in a timely manner.
Myth #2: Insurance is too expensive.
Insurance is available to suit nearly every need and budget. In fact, a healthy 35-year-old male can buy $250,000 of annual renewable term life insurance coverage for less than $20 per month. And for just over $100 a month, he could purchase a guaranteed death benefit for his lifetime.1
If the same 35-year-old male makes $75,000 per year, he could potentially buy disability income insurance that would pay an after-tax benefit of $3,925 per month until age 65, should he ever become too sick or hurt to work. Better yet, he could buy that coverage for less than 2% of his annual income.2
Whether your goal is maximum income protection, safeguarding specific expenses (such as a mortgage), or budget-based coverage, an individual disability income insurance (DI insurance) policy can be designed to meet your needs.
In fact, you could insure your income for about the same amount you spend on:
- A daily cup of premium store-bought coffee
- Date night each month
- Monthly cable bill
- Movie rentals
Myth #3: I can wait to buy insurance when I need it.
Some people think they are saving money by delaying the purchase of individual DI insurance. But the reality is that most DI policies allow you to lock in your premium, so you can take advantage of the lower rates available to you at a younger age.
And not only will rates increase as you age; you may reach a point when you’re not even insurable at an older age. But start small to lock in rates now, and you can usually increase your coverage in the future.
The bottom line is that your financial representative can tailor a program to meet your budget and needs.
Myth #4: It won’t happen to me.
Many people think a disability won’t happen to them because they plan to stay healthy, yet actual Principal Life Insurance Company® disability insurance claims show that fewer than 1 in 10 claims result from injuries. DI insurance covers a range of common illnesses too, some of which may not be preventable.
Considering the devastating effect a disability can have, not just on your current income, but also on your retirement savings and long-term financial security, DI insurance coverage is more than just extra protection. It’s a foundation for securing a more stable future for yourself and your family—no matter what challenges life brings.
1 Based on current rates and charges for a Principal Universal Life Protector IVSM policy for a 35-year-old male non-smoker rated Super-Preferred. For specific information, please contact your financial representative.
2 Disability income insurance calculations are based on a variety of factors. Disability income insurance also has limitations and exclusions. For specific costs and complete details of coverage, contact your financial representative.