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BellaOnline's Insurance Editor

Dispelling Insurance Myths

Myth #1: Insurance Should be Bought and Used for Every Accident and Disaster.

Insurance is designed to protect one from catastrophic disasters. An insurance rule of thumb: If you can pay for the loss or damage without a financial hardship then pay it, otherwise expect your insurance premium to eventually show an increase. Also, buying every type of insurance just isn't necessary. Sometimes the risk is worth taking rather than paying a premium.

Myth #2: I am Alive, I Must Need Life Insurance!

Life insurance is designed to take care of one's dependants after the caregiver's death. If you have no dependants, then you probably don't need life insurance. This includes children and retired persons... usually they don't have people that depend on their income so life insurance for these groups can, in rare instances, be beneficial but is usually unnecessary.

Myth #3: Whole and Universal Life are the Best Life Insurance Choices Since I Can Get My Money Back.

Term life insurance is probably the best choice for most. Term life is set for a specific term, like 10-30 years, with a much lower premium than whole and universal life. Your best bet? Buy term life and invest the premium difference in a retirement account. Check with your financial advisor.

Myth #4: Flood Insurance is Only for People Who Live in a High Risk Area.

Everyone who lives in a National Flood Insurance Program area is eligible and can buy flood insurance. These areas are not always prone to floods so even if you think your area is low risk you may be eligible. Check with your insurance agent to learn more.

Myth #5: I have a delivery newspaper and pizza delivery job. I am not self-employed so my auto insurance will cover any accidents.

If your vehicle is used for anything but personal use, then you will probably need to extend your personal auto policy to cover business use of your vehicle. Don't think just because you were unaware of your coverages this will get your accident paid for--your insurance policy is a contract that you agreed to adhere to. If you don't understand all the coverages in your contract you need to contact your agent about the questions you have.

Myth#6: I Don't Need Disability Insurance... If I Become Disabled Social Security Will Take Care of Me.

Don't count on Social Security to take care of all your needs if you become disabled. If you are able to get Social Security for your disability (not all get approved to receive disability benefits so don't assume you will) then you will still have to wait months before you receive benefits and your disability needs to be long-term to qualify. And even if you qualify for benefits, will it match your current salary? Probably not.

Myth #7: If I Need to Stay in a Nursing Home When I am Older, The Government Will Pick Up the Bill.

Again, don't count on Medicare or Medicare Supplemental Insurance to pick up the bill. If you can qualify, Medicaid may pay up to half of the cost. Choosing long term care insurance can help you pay for the costs of a nursing facility or home care if the need arises. Also, do you really want your family to have to pick up the bill if you acquire a long term illness or disability? Long Term Care Insurance is a great option and if started early in life the premiums can be very reasonable.

Myth #8: Umbrella Insurance Coverage is Just for Rich People.

Umbrella insurance is not just for the wealthy. With the common occurrence of lawsuits, umbrella insurance is a must for every home, auto, and watercraft owner. Umbrella insurance is designed to give one added liability protection above and beyond the limits on homeowners, auto, and watercraft personal insurance policies. With an umbrella policy, depending on the insurance company, one can add an additional 1-5 million in liability protection.

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This content was written by Denise M. Castille. If you wish to use this content in any manner, you need written permission. Contact Denise M. Castille for details.

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