Myths and Facts About Insurance: What Every Person Should Know
Insurance is a critical component of financial planning, yet it remains one of the most misunderstood topics. Misinformation and myths often prevent people from making informed decisions that could protect their health, income, property, and loved ones. In this article, we will debunk common insurance myths and present the facts, supported by credible sources, to help everyday individuals better understand the role and value of insurance.
Myth #1: Life Insurance is Only for the Elderly or Parents
Fact: Life insurance can be beneficial at any age. Buying a policy when you're young and healthy typically means lower premiums. It's also useful for covering debts, funeral costs, or providing for a spouse or aging parents. Many young adults don’t realize that life insurance can also help secure loans or provide a financial safety net for dependents in case of untimely death. Additionally, permanent life insurance policies can build cash value over time, which can be borrowed against for major expenses.
🔗 Insurance Information Institute. (n.d.). What age should you get life insurance? Retrieved from https://www.iii.org/article/what-age-should-you-get-life-insurance
Myth #2: Health Insurance is Too Expensive to Be Worth It
Fact: While premiums can be costly, health insurance helps prevent devastating out-of-pocket expenses in the event of a major illness or injury. Many people qualify for subsidies through their local marketplace or employer. Skipping coverage can lead to huge financial burdens during unexpected emergencies. Preventive care, regular check-ups, and chronic condition management are often included in plans, helping individuals stay healthier and potentially reduce long-term medical costs.
🔗 Healthcare.gov. (n.d.). Four reasons why you need health insurance. Retrieved from https://www.healthcare.gov/blog/four-reasons-why-you-need-health-insurance/
Myth #3: I Don’t Need Renters Insurance Because My Landlord Has Insurance
Fact: A landlord’s insurance only covers the building, not your personal belongings. Renters insurance is affordable and protects your possessions from theft, fire, and other covered events. Additionally, renters insurance can provide liability coverage if someone is injured in your home, and it may also cover temporary living expenses if your unit becomes uninhabitable due to a covered loss.
🔗 National Association of Insurance Commissioners. (n.d.). Renters insurance. Retrieved from https://content.naic.org/cipr-topics/renters-insurance
Myth #4: Auto Insurance Covers Everything Automatically
Fact: Auto insurance policies vary. Basic liability insurance doesn’t cover damage to your car. Comprehensive and collision coverage are optional but essential if you want broader protection. Understanding the types of coverage available—such as uninsured motorist coverage, medical payments coverage, and roadside assistance—ensures that you're not left with surprise expenses after an accident.
🔗 Consumer Financial Protection Bureau. (n.d.). What are the different types of auto insurance coverage? Retrieved from https://www.consumerfinance.gov/ask-cfpb/what-are-the-different-types-of-auto-insurance-coverage-en-1459/
Myth #5: Insurance is a Waste of Money if You Never File a Claim
Fact: Insurance is designed for protection, not profit. Just like you wouldn’t regret buying a smoke detector that never goes off, insurance provides peace of mind and financial security in case the unexpected happens. Having insurance coverage can also help you qualify for certain services or assistance in emergencies, and it plays a key role in long-term financial resilience.
🔗 Liberto, D. (2016, August 26). 5 insurance myths you should ignore. Investopedia. Retrieved from https://www.investopedia.com/articles/personal-finance/082616/5-insurance-myths-you-should-ignore.asp
Myth #6: Life Insurance Through My Employer is Enough
Fact: Employer-provided life insurance is often limited in coverage and may not be portable if you leave your job. It’s wise to consider an individual policy for more control and higher benefits. Group policies typically offer coverage of 1–2 times your annual salary, which may not be sufficient to cover long-term needs like mortgages, education expenses, or dependent care.
🔗 Tretina, K. (n.d.). Group life insurance: What you need to know. NerdWallet. Retrieved from https://www.nerdwallet.com/article/insurance/group-life-insurance
Final Thoughts
Understanding the truth about insurance helps you make smarter decisions for yourself and your family. Don’t let myths keep you from securing your financial future. Speak to a licensed insurance advisor to find the right coverage for your unique needs.
Want to learn more? Explore educational tools and resources from the National Association of Insurance Commissioners or visit Healthcare.gov for health insurance information. You can also talk to our Licensed Financial Professionals at WSB Hawaii to get personalized guidance tailored to your financial goals.
👉 Click here to schedule a consultation with WSB Hawaii
Disclaimer: This article is for informational purposes only and does not constitute professional financial advice. Always consult with a qualified advisor before making insurance decisions.
