6 Myths (Or Excuses) Why People Don’t Buy Enough Life Insurance

Myth #1: I don’t need life insurance because I’m single and have no dependents.

Fact: Everyone leaves behind expenses when they die. In addition to funeral costs, there may be medical bills and personal debts that have to be paid. While your estate could be liquidated to cover some of these costs, it takes time and may not be enough. Life insurance relieves the financial burden of your death on your family or executor by creating instant tax-free cash. 

Myth #2: I have enough life insurance through my employee benefits.

Fact: Most employee life insurance benefits are designed to provide a basic amount of protection that would only be considered adequate for someone with a low income or very modest needs (see next myth below). In addition, employer provided life insurance cannot be considered permanent as the benefit can be reduced or lost if you leave your job. You may also be surprised to know that depending on your age and state of health, a personally owned life insurance policy may end up costing less than your employee benefit options. 

Myth #3: Twice my annual salary is an adequate amount of life insurance.

Fact: There was a time when many insurance experts used a multiple of earnings to determine your recommended life insurance purchase. However, most now agree that the insurance protection needs of most people are too complex to be adequately addressed with a simple income based formula. Addressing the financial risks associated with changing personal debts, rising family income needs and uncertain investment performance requires a detailed analysis before an insurance amount can be recommended. As a result, using a multiple of earnings as a life insurance amount is too imprecise. 

Myth #4: All life insurance is the same, so you should always buy the cheapest policy.

Fact: While all life insurance is designed to pay a benefit at death, there are many different policy choices and options. Depending on your needs, the cheapest route may not be your best solution. Don’t use price as your final decision factor until you have a complete understanding of your financial protection needs and the pros and cons of each policy choice option. Once it comes down to cost, don’t jump at the cheapest initial price. Focus on the total life-time cost of owning your policy and the reputation of the company that backs it. 

Myth #5: I won’t need life insurance once my children are grown and my mortgage is paid off.

Fact: How would your spouse manage daily living expenses if you were suddenly gone? What if your spouse outlived you by 10 or 20 years? Life insurance is a great strategy for creating a lifetime income for your spouse. If your spouse’s income is not an issue, your policy proceeds can be used as a tax-free gift for your children, grandchildren or favorite charity. 

Myth #6: It’s a big inconvenience to buy life insurance!

Fact: It’s a fact that any purchase as important as life insurance requires a modest investment of your time, but it does not have to be a major inconvenience. A skilled insurance agent who has experience working with busy legal professionals will respect the value of your time and work as efficiently as possible to get your policy issued. 

Please note that my advice is not intended to replace that of a qualified insurance expert who has personally reviewed your specific benefits and insurance needs. If you want to learn more, the CBIA offers excellent insurance education articles and planning tools for lawyers at You can also find your local insurance sales representative who can assist you with your insurance questions and needs. 

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