Insurance: The 3 Myths You May Be Falling For

Don't fall for these 3 insurance myths.

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Today we have a guest post on insurance from Jennifer Jaime. Jennifer is a CPA from Texas and recently started her blog DontSaveForRetirement.net. As you can tell from her blog name, Jennifer offers a unique perspective on personal finance!

Keep reading below to learn athe most common insurance myths people fall for.

Don't fall for insurance myths! Check out the top 3 insurance myths you may be falling for.

Top 3 Insurance Myths

Everyone needs insurance.  Young or old, and somewhere in between we all need insurance.  Insurance is something people buy to protect themselves from losing money.  It protects your money from disastrous events so you don’t have to pay huge amounts of money out of pocket.  Disastrous events can include job loss, car accident, injury, illness, fire, theft and natural events such as hurricanes and tornadoes.

There are a lot of myths around insurance.  I hear a lot of grumbling when it comes to insurance.

Myth #1 – Insurance costs too much money.

Truth #1 – It is true that insurance does cost money; however, it is less expensive to pay a premium each month than it is to pay a large sum of money in the event of a disastrous event.  The cost of paying out of pocket for any disastrous event can cripple you financially.  I have heard many stories of families who had a medical event happen and it took a long time for them to recover financially.  Yes, you may pay out of pocket each month but it is worth the minimal cost in comparison to the out of pocket costs if you had no insurance coverage.

Myth #2 – I don’t need insurance, I am fine.

Truth #2 – We don’t know what the future holds.  The good part is we also don’t have to try to figure it out.  All we have to do is our part to prepare ourselves for the “what ifs” in life.  While you may not need it today, you may in the future. Keep the focus on your financial goals, such as savings and getting out of debt, and let insurance be a thing you do to meet the unknowns in life.  You will never know when you will need it – so get it and forget it.

Myth #3 – Insurance companies are evil.

Truth #3 – Insurance companies are a means to an end – they give us the products we need.  Yes, it is true that insurance companies make a lot of money and you may never recoup those costs.  However, just because insurance companies are profitable from all the premiums they collect, doesn’t mean they are evil.  If we focus on the profit of insurance companies, we are missing the point.  The point is not whether insurance companies are evil, the point is we need to cover ourselves financially and they provide a product to handle our claims.  In a beautiful world, you would be self-insured and have enough money in the bank to pay all the out of pocket costs for any disastrous events.  If you aren’t self-insured, then insurance companies are there to meet the need.

Must have insurance coverages:

Below are a few insurance coverages that are a must have for everyone.

Health Insurance –There are lots of changes going on with healthcare right now and I recommend you research the best plans to cover you in the event of an illness.

Life – Term life insurance is important to protect you and your family’s wealth.  I recommend you get coverage 10x your annual salary.

Cars – Get full coverage if you don’t have money in the bank to cover all losses for “at fault” accidents.

Home – If you rent, get renter’s insurance to cover all your contents in case of a disastrous event, such as a fire.  If you have enough money in savings to replace all your furniture and appliances, then you are self-insured and renter’s insurance is not needed.  For your home, if you carry a mortgage, most lenders require you to provide coverage.  Even if you are not required, a homeowner’s policy is needed to protect your wealth.

Work – If your work offers disability insurance, get the policy since it covers your income in the case of an event that keeps you from being able to work.

 

The biggest takeaway is to get insurance in all areas of your life – health, life, cars, home & work. Avoid the insurance myths and get the coverage you need to protect your money.

 

 About the Author

Jennifer JaiTop 3 Insurance Myths You May Be Failing Forme is a CPA and Money Coach based in Austin, TX.  She loves sweet tea, her family and walking her two crazy dogs, Walter & Sissy.  Financial literacy is her passion and loves every opportunity to share the message of hope.  Follow her on Twitter @jennjaime1 or her blog, www.dontsaveforretirement.net.

29 Replies to “Insurance: The 3 Myths You May Be Falling For”

  1. Yes to all of these! It’s so important to have insurance because if a true emergency happens you’re going to be out a lot of money.

    1. Exactly! An emergency fund may not be enough to cover they payments if something terrible happens. Insurance helps cover that liability!

  2. These are good reminders. I appreciate the explanations. Those a big help.

  3. Life insurance is a MUST. Can’t begin to stress that enough…..

  4. insurance is something I need to sort out! In the uk you don’t need health insurance and you have to have car insurance if you drive but I don’t think people take life insurance very seriously. I don’t know many people that have it. I guess no one wants to think about not being around anymore!

    1. I think you’re right! It’s a tough thing to think about but I think it’s so important. It’s better to handle your affairs now to ensure your loved once are protected if something happens to you.

  5. Very nice! It makes me look at insurance in a whole different perspective!

    Virtuous Mama
    http://Www.virtuousmama.org

    1. So glad you enjoyed the post!

  6. Thanks for the great article! Insurance is sooo important to have for you and your family. I am completely risk-averse, but I don’t believe it’s a difficult choice to make. Get the coverage you need.

    1. So glad you enjoyed the post!

  7. I can see both sides of the story here…. personally my premiums under Obamacare are frightful, and I canceled a long time ago. It would cost me less to go to the emergency room and pay full price. That’s the truth!

    1. Very interesting! I am from Canada so I don’t know too much about Obamacare. I can’t even imagine going to the emergency room and having to pay!

      It’s a good thing you really assessed if Obamacare was worth it for you. I am sure many people don’t take the time to make a good assessment and are likely paying high premiums when they don’t need to be.

  8. Really helpful post. Insurance companies are not evil but they do try to take out as much money as they can. In the UK, a new formula has been introduced by the government for compensation from the insurance company and this means that all young drivers are going to be facing around £100 increase in insurance. This is a lot for the young drivers and I’m pretty sure the insurance are going to be reacting pretty fast to this news

    1. Wow! That’s so expensive. Here in Saskatchewan, Canada, our insurance is covered when we pay for our license plates. I pay around $100 per month and that is expensive enough for me!

  9. This is a great post Jennifer! I love how tackled the myths we often hear about insurances. We always need to protect ourselves in all areas of our lives. Thanks for the list on the must-have insurance coverages! xx

    http://www.prettyweirdbombshell.com/blogger-content-creation-challenge/

  10. My father thinks life insurance is evil. I don’t. It protects my family.
    Make sure you’re not underinsuring your car. My son started University and was traveling much farther so we changed his coverage to make certain he was covered for the use, no longer pleasure, and the distance.

    1. Many people think life insurance is a bad idea. Truthfully, sometimes it is a bad idea. It depends on a number of factors, such as your age, health, lifestyle, etc. However, everyone should at least look into it to see if it is right for them.

  11. Number 3 is SO true!!! Insurance companies usually do not want to lose their customers and will typically go above & beyond to make the customer happy! What a great informative post.
    Lauren recently posted…4 MUST-HAVE ITEMS FOR COLLEGE DORM ROOMS

    1. So glad you enjoyed the post.

      Any organization with customers should ALWAYS go above and beyond for their clientele. This includes insurance companies!

  12. Currently I am taking insurance information technology and insurance basic. I love this post! Most people think is a waste of money to have insurance but it’s actually not because we don’t know what tomorrow will be. This is a nice piece.

    1. Happy to hear that you like this post!

  13. I completely agree with busting that #2 Myth! Speaking from recent experience, the best time to set up insurance is when you are “fine”! My husband’s in his early 30’s but because of health history over the last few years we pay 3x the price for his life insurance as we do for mine.

    P.S. Awesome to see a fellow SK girl blogging!

  14. Unfortunately I’ve said all of these at some point in time!

  15. Thanks for sharing this very informative post. I have a small life insurance policy through my employer, but it would probably be a good idea to sit down and have a conversation with a reputable insurance agent.

  16. Absolutely agree! It totally depends on who you are working with. If you find the right ins company and develop a partnership… it’s a much different experience.

    xx,

    Lacey
    http://www.theglittergospelblog.com

  17. 3 Myths, Such an ideal thoughts you mentioned, especially health and car insurance are much needed, you know one of good friend’s was driving a car month ago and suddenly met with accident, that he had not an insurance so he paid money from his pocket, so i think it is better for us to get insurance, sometimes it cost more but after all it is benefit our self only.

    Thank you for you post. I really enjoyed reading.

    1. So sorry to hear about your friend! It’s too bad he didn’t have insurance at the time of the accident. Hopefully, he will consider purchasing insurance in the future!

  18. Most of the people are not understanding the importance of Insurance policies. This post gives a positive impact on Insurance. Thanks for sharing your ideas with us!

    1. So glad you enjoyed the post! Insurance can DEFINITELY be a positive thing.

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