12 Life Insurance Myths That Cost Families Money

Myth 1: "My coverage at work is enough."

Group life is usually one or two times your salary, while most families need far more. And it typically ends when the job does: layoffs, a career change or retirement can leave you uncovered right when you're older and coverage costs more.

Myth 2: "Life insurance is too expensive."

A healthy 30-year-old can often get $250,000 of 20-year term coverage for roughly $15 to $20 a month. Price climbs with age and health issues, which is a reason to look sooner, not later.

Myth 3: "I'm young and healthy, so I don't need it yet."

Young and healthy is exactly when it's cheapest and easiest to qualify. Your rate is locked in for the length of a term policy, so buying at 28 instead of 38 can save a lot over time.

Myth 4: "Stay-at-home parents don't need coverage."

Childcare, transportation, cooking and household management are expensive to replace. Many estimates put that work at well over $50,000 a year. See coverage for stay-at-home parents.

Myth 5: "I'm too old to get life insurance."

Many final expense policies accept applicants up to age 85, and some guaranteed issue policies go to 85 or beyond. The amounts are smaller, but they're designed for exactly this stage of life.

Myth 6: "I was turned down once, so I can't get covered."

Every insurance company has its own underwriting rules. A decline from one carrier says nothing about the next, and guaranteed issue policies don't ask health questions at all. Read what to do after a denial.

Myth 7: "Insurance companies look for reasons not to pay."

The vast majority of claims are paid. Denials mostly come from policies that lapsed for non-payment, or from serious misstatements on an application made within the first two years. Answer honestly and keep the policy paid, and your family is in good shape.

Myth 8: "The payout is taxed."

Death benefits paid to a named beneficiary are generally not subject to federal income tax. Large estates can face estate tax, but that only applies to estates above the federal exemption, which is $15 million per person in 2026.

Myth 9: "Whole life is always a bad deal."

It costs more than term, and it isn't right for everyone. But for lifelong needs like final expenses, leaving an inheritance or estate planning, permanent coverage does a job term can't, because term usually ends before you do.

Myth 10: "Term insurance is money down the drain if I don't die."

You don't call your homeowner's policy a waste because the house didn't burn down. Term buys protection during the years your family would struggle most without you. That protection had value every single day.

Myth 11: "Smokers can't get life insurance."

They can. They pay more, and the rate can drop once they've been nicotine-free for a year or more with many carriers. Details are in life insurance for tobacco users.

Myth 12: "My spouse can just handle my funeral with savings."

Funerals in the U.S. commonly run $7,000 to $12,000 or more, and they're due within days. Bank accounts in only the deceased's name can be frozen until the estate is sorted out. A small policy paid to a named beneficiary avoids that squeeze.