If there’s one thing a lot of adults still don’t understand—and yet participate in—it has to be insurance. A survey conducted by the National Association of Insurance Commissioners (NAIC) in 201 revealed that only 45% of the 1000 participants felt confident enough with their insurance decisions.
63% of the respondents did not know whether or not car insurance covers the theft of items within the car. 54% didn’t know that their credit score could affect their insurance premiums. Finally, 83% did not even understand the contents of their liability coverage.
This only shows that a lot of people still have misconceptions where insurance is concerned. They don’t understand how it works, and therefore are liable to find themselves in a precarious position should they need help with their claims. Believing these myths about insurance could leave you unprotected and uninsured.
Here are several myths and misconceptions on insurance and why you should stop believing them:
Myth #1: You need every kind of insurance available. These days, there are more and more types of insurance beyond the usual ones that a lot of us are familiar with, like health or home insurance. You now have credit card debt insurance, identity theft insurance, child life insurance, and even mortgage insurance. Though one can picture a need for that type of protection, it’s not always a necessity. If you don’t live in an earthquake-prone area, then you don’t need earthquake insurance.
Myth #2: Young people don’t need life insurance. This is a potentially wasteful myth. Younger people can get life insurance for lower premiums. The younger you start the better. A lot of young people assume they don’t need life insurance. The reality is that anyone who has financial dependents will need insurance. Your sudden death could leave your family in the lurch and with a heavy financial burden.
Myth #3: Insurance is a rip-off because I’m not getting any benefits. A lot of people are wary of paying for insurance because they can’t see themselves benefiting from it. In a way, it is true. You may pay for automobile insurance then never get into any accident in your life. But insurance is not a rip-off. It is protection against serious financial burdens, and if you never have to use it, then you’re quite fortunate.
Myth #4: My job provides insurance coverage so I don’t need to purchase my own. Group insurance can be useful, but it’s also limited. Most companies have specific limits (usually hinged on the size of your salary) for disability insurance. Plus, most of these plans do not cover your additional income like bonuses and commission. Most importantly, if you lose your job, your insurance protection goes out the window, too.
Myth #5: Your credit score doesn’t matter. When insurance agents calculate your premiums, they are factoring the risk that the company will have to take in insuring you. As such, even your credit score is taken into account. If your credit standing is poor, you are likely to be saddled with higher premiums.
How much do you know about your insurance? Did any of these myths come as a surprise to you? Let us know in the comment box below!