Life insurance is a financial instrument surrounded by a lot of rumors and speculations. Perhaps this is because the instrument is quite complex, and not everyone understands the nuances of insurance, so they draw conclusions based on information they have come across somewhere, at some point.
Think of American movies or TV series where we have seen murders and fraud committed for the purpose of obtaining insurance payouts. Perhaps, it is from there that one of the common myths about life insurance was born, that the policy is only taken out in the event of loss of life.
Today, we will debunk this and other myths!
- Life insurance is purchased solely for the event of death 😬
Insurance policies, in addition to covering the risk of loss of life, also cover many other important risks such as injury, disability, diagnosis and treatment of illnesses, hospitalization, and many more. Furthermore, an insurance policy allows you to accumulate funds for important events (such as children's education or additional pension) or grow your accumulated capital.
- Life insurance is needed for people with dangerous professions 🤕
While it is true that people with dangerous professions face higher risks, everyday life also carries its own dangers. For example, the probability of getting into a car accident is the same for an office worker and a miner if they spend an equal amount of time behind the wheel.
- Life insurance is expensive 😒
The variety of insurance programs allows everyone to choose coverage according to their budget. The advantage of life insurance is that relatively small premiums provide coverage that exceeds the amount paid by several folds. Insurance costs are insignificant compared to the expenses that can arise in the case of injury or illness. For example, coverage for the diagnosis of a critical illness amounting to 300,000 euros can be purchased for just 130 euros per year.
- Life insurance is only needed for breadwinners 🧐
Similarly, it is often heard that insurance is not needed for single individuals. We have already discussed this in detail (for those who haven't read it yet, the article is available at this link). In short, life insurance is necessary for both homemakers and single individuals, the poor and the rich, and anyone who cares about their future.
- I am too young to think about insurance 🙄
It is never too early for life insurance. On the contrary, the earlier you have a policy, the more advantageous the insurance conditions will be for you. At any age, you can start saving for future retirement, invest in an investment policy. It is also important not to forget about risk insurance, as diseases have "become younger" in recent years, and being young does not mean that a person does not need insurance protection in the event of illness or injury.
- Endowment policy and deposit are the same thing 🤨
This is a common mistake. A deposit and an endowment policy are different financial instruments. The purpose of a deposit agreement is accumulation, usually short-term or medium-term, as deposit agreements are usually made for one year, occasionally for 3-5 years. An endowment insurance policy is a unique instrument that combines long-term savings and insurance protection, which a deposit lacks, as well as any other financial instrument. In other words, the purpose for which funds are accumulated is also protected in case of unforeseen health events.
- Insurance companies are not reliable financial institutions 🤔
The activities of insurance companies are strictly regulated by the government. Regulatory requirements for the size of statutory capital, requirements for the placement of insurance reserves and restrictions on their use, supervision, and audits by regulatory bodies – all of these are guarantees of the reliability of life insurance companies.
We hope that we have addressed popular misconceptions and created a false impression about life insurance. It is worth noting that in recent years, the awareness of our citizens regarding life insurance has been increasing, and the number of insured individuals is growing every year.
This brings us great joy and instills hope that the younger generation will be even more conscious about life insurance!
