Most common misconceptions about life insurance

Justin Sonon • September 25, 2024

Think you don't need life insurance?

Here are some of the most common misconceptions about life insurance:

1. Life Insurance is Only for Older People

Many believe life insurance is unnecessary until later in life, but getting coverage when you're younger is usually more affordable. Life insurance can provide financial security for your family at any stage of life.

2. It’s Too Expensive

While some policies can be costly, there are many affordable options, especially if you start when you’re younger and healthier. Term life insurance is particularly budget-friendly.

3. I Don’t Need It If I’m Single or Have No Dependents

Even if you’re single, life insurance can cover debts, funeral costs, or leave an inheritance. Additionally, your needs may change if you have children or get married later.

4. Employer-Provided Life Insurance is Sufficient

Many people assume their group life insurance through work is enough, but these policies often provide limited coverage (1-2 times your annual salary). It may not be enough to cover significant expenses or last if you leave the job.

5. I Can't Get Life Insurance Due to Health Issues

While some health conditions can affect the cost or availability of certain policies, there are still options, such as guaranteed issue policies, which do not require a medical exam.

6. Stay-at-Home Parents Don’t Need Life Insurance

Even if a parent doesn’t earn income, life insurance can cover the costs associated with child care, household management, and other essential services that would need to be replaced if they were no longer around.

7. Once I Buy Life Insurance, I Don’t Need to Revisit It

Life insurance needs can change over time as your financial situation evolves. It’s important to periodically review and update your policy as your income, debts, or family circumstances change.

8. Life Insurance Payouts Are Taxable

In most cases, life insurance payouts are not subject to income tax. However, estate taxes could apply in certain situations for high-net-worth individuals.

9. I Can’t Qualify If I Have a Risky Job or Hobby

Although certain professions or hobbies (like skydiving or scuba diving) may increase premiums, it doesn’t necessarily disqualify you from coverage. Specialized policies are often available.

10. Life Insurance is Just for Covering Funeral Costs

While life insurance does cover funeral expenses, it also provides financial support for long-term needs like mortgage payments, education expenses, or replacing lost income.

Visit our life insurance page to quote and enroll in a new plan in minutes. It has never been easier to get covered.

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Navigating the Medicare Prescription Drug Spending Cap

By Justin Sonon • February 12, 2025

Starting in 2025, Medicare is introducing a new $2,000 out-of-pocket cap on prescription drug spending for enrollees in Medicare Part D. This cap is a result of the Inflation Reduction Act and is designed to limit the financial burden of high-cost medications. How It Works: 1. Annual Out-of-Pocket Cap: Once your total out-of-pocket spending on Part D drugs reaches $2,000, you won’t have to pay anything more for covered prescriptions for the rest of the year. This replaces the current system, which has a catastrophic phase where patients still pay a percentage of drug costs. 2. Monthly Payment Plan (New Option): Medicare will offer an option to spread out drug costs over the year rather than paying large sums at once. This can help enrollees manage expenses more predictably. 3. Who Benefits the Most? Beneficiaries with high prescription drug costs—especially those taking expensive specialty medications. Anyone who previously spent more than $2,000 annually on prescriptions. 4. How to Prepare for 2025: Review your current Part D or Medicare Advantage plan to see how it covers your medications. Look into enrollment options for the new monthly payment plan if you prefer spreading costs over time. Stay updated with your plan provider on any changes in premiums, formularies, and copays. 5. Does using GoodRx count towards the spending cap? No. In order to reach your spending cap, you must only use your Medicare prescription drug plan.