Insurance products are shrouded in mythology. While they afford tremendous protection to those who take them out, they can be confusing.
The purpose of this post is to clear up the mystery and give you the information you need. Check out our top five myths about insurance below.
1. It’s Unaffordable
Many people skip insurance because they think it is unaffordable. They would rather take the risk and see what happens to avoid the premiums.
But when you investigate the price of insurance further, you discover something you don’t expect: insurance is actually much more affordable than most people believe. Monthly payments are surprisingly low.
2. Not Necessary
Another objection is that insurance is “not necessary.” People sometimes assume that they can cover any costs they incur out of their savings. However, again, that’s not always true.
For starters, having insurance is actually a legal requirement in many situations (as it is for drivers and businesses). Moreover, most people underestimate the true cost of covering a loss.
For example, when you write off your vehicle, it’s not just a matter of replacing yours. You also have to factor in costs of the incident for other people, paying for any damages or injuries that you cause. Thus, the total bill is much higher than you might think.
Ask yourself honestly whether you want to risk a heavy loss. In most cases, you’ll find that skipping premiums simply isn’t worth it.
3. You Can Stay on Your Parents Insurance
In some cases, you may be able to stay on your parents’ insurance. However, most policies end by your mid-twenties, meaning that if you don’t have your own insurance, you’re not covered.
Health insurance is a good example. As a family member, you can remain on your parents’ plan until you reach adulthood. However, after that, you may need to take out your own policy. The same applies to auto insurance. After a certain age, you may not qualify for cover under your parents’ policy.
4. Insurance is Only for the Wealthy
The idea that insurance is only for the wealthy is another common misconception. When it comes to insurance, it’s not about how much you have, but about how much you can afford to lose. Those on regular incomes typically can’t afford to lose money to cover their losses in the same way that wealthy people can.
Fortunately, there are a host of affordable insurance products on the market today. These allow you to select the extent of cover you need efficiently and avoid overpaying.
5. You Don’t Need Insurance if You are Single and Have No Dependants
The final myth out there is that you don’t need insurance if you are single and have no dependents. However, even if nobody is relying on you, it doesn’t mean that your life is risk-free. In fact, you can still incur massive losses.
For instance, your health might fail or you might get involved in an accident. Burglars may steal from your home or a customer might make a liability claim against a business you own.
All of these are real risks that you need to take into account. They are independent of your marital status or number of dependents.