Biggest Life Insurance Myths – How to Handle Them Like a Pro
- National Best Practice Leader at Desjardins
- Published on June 4, 2024
- Updated on September 1, 2024
Table of Contents
Life insurance agent’s job is to protect families and their financial futures. And that’s pretty much impossible if we can’t overcome the endless life insurance myths prospective clients throw our way.
During the recent Discovery Series podcast with my friends Chiara Missalino, Zarir Dadinatha, and Co-Host David Lee, we talked about the most common life insurance myths advisors face on a daily basis. You know the ones I’m talking about. The myth that life insurance is some luxury only affordable for the rich. Or my personal favorite – “I’m young and healthy, so I’ll just get coverage later when I’m older!”
The truth is, overcoming objections and life insurance myths requires completely reframing your prospect’s entire mindset around life insurance. You have to be willing to challenge those preconceived notions head-on, while still maintaining professionalism and building trust.
In this guide, I’ll share some of my main strategies for creatively dismantling one of the most common life insurance myths. Let’s bust those myths once and for all!
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Myth #1: Life Insurance Coverage is Only for Rich People.
Life insurance is only for rich people? What a load of BS! Pardon my French. I guess that means poor people are just supposed to die quickly and get it over with.
If you thought, you’re the only agent who has to deal with this life insurance myth you’d be soo wrong! Chiara Missalino mentioned on the Discovery Series podcast how even her own dad was convinced! “I went to my dad and I said, ‘Hey dad, guess what? I’m going to do life insurance’… And he goes, ‘but that’s only for richer people.’” Can you believe that!?
Chiara’s father, like so many others, had been misled into thinking life insurance was some sort of luxury only affordable to the wealthy. Chiara’s family tragically learned firsthand the importance of health and life insurance after her parents faced serious health issues.
Obviously, this “life insurance is only for the rich” myth is total nonsense perpetuated by people who simply don’t understand how affordable purchasing life insurance actually is for most families. Life insurance isn’t some exclusive country club you have to be wealthy to join.
Life insurance is only for rich people? If anything, it’s the exact opposite. It’s like saying seat belts are only for luxury cars – utter nonsense! Life insurance is the ultimate equalizer – it’s there for everyone. In fact, when you buy life insurance at a younger age, you can lock in lower rates and save money over time.
How to debunk the "Life Insurance Coverage is Only for Rich People" myth
One of my favorite ways to debunk this insurance myth is by relating it to a simple daily cost that any budget can afford.
You can ask your client: “How much are you spending every day on those quadruple-shot pumpkin spice latte concoctions with the extra whipped cream? 7 bucks? 10 bucks?” Here’s your liquid caffeine-sugar rush, sir, with a side of impending diabetes! Oh, and the “mandatory tip”! Yeah, let me just add a 25% tax for not butchering your name. Thank you very much!
If you’re talking to Gen Z clients, then you gotta talk bubble tea. “Here’s your beverage, complete with a side of jaw workout!” I straight up refuse to buy those after learning that bubble tea shops have a gross margin of 80%. 80%! Can you believe that! That’s not a drink, that’s a gold mine disguised as a beverage! Hint, Hint to my Gen Z daughter who loves bubble tea!
Then you can hit them with: “Well, for just half that overpriced liquid sugar every day, I can get your whole family millions in life insurance to avoid them living in a shoe box if something terrible happens to you!”
Using simple, relatable examples makes it crystal clear that life insurance is far from some luxury only affordable to the wealthy. Anyone who can swing $5-10 for a daily dose of overpriced caffeinated concoctions can easily budget for an affordable coverage.
Life insurance coverage can also be calculated based on a percentage of one’s annual salary, making it accessible and affordable for a wide range of incomes.
As an insurance agent, it’s your job to creatively reframe the way you discuss life insurance costs with your clients. Relate it to expenses they can easily cut back on, and they’ll realize how affordable permanent life insurance actually is for their current lifestyle and budget.
Myth #2. I Don't Need Life Insurance Because I'm Young and Healthy.
One of the biggest life insurance myths agents hear on a daily basis is “I’m young and healthy, so I don’t need life insurance coverage right now.”
You don’t need life insurance because you’re young and healthy? Well, isn’t that just amazing! I’ve got some news for you – healthy people die every day in horrible accidents. But you just keep livin’ that dream.
This “young and healthy” excuse is obviously total nonsense. Letting this insurance myth slide can completely derail your ability to get affordable permanent life insurance coverage locked in for your clients. Buying life insurance while young and healthy is crucial because it allows you to secure lower premiums and ensure financial security for your family members.
You know, even my co-host David Lee – that caffeinated Millennial who loves his Starbucks a little too much if you ask me – was smart enough to get permanent life insurance before joining the insurance industry. Why? As David put it: “For me, it was loving my parents. That’s why I got life insurance at a young age.”
Even though he wasn’t contributing financially to his parents at the time, he didn’t want to burden them with potential expenses if anything were to happen to him unexpectedly. “If I had accidentally died in a car accident because it does happen or because I love traveling if something happened to me abroad I wanted to ensure that they’re not burdened with the finances that I’m going to leave behind.”
How to debunk the "I Don't Need Life Insurance Because I'm Young and Healthy" myth
Here’s what life insurance agents need to hammer home: Getting a permanent life insurance policy at a younger age is the most cost-effective way to financially protect your family members if you unexpectedly face a medical emergency or health condition down the road.
When determining how much life insurance coverage is necessary, consider factors such as annual salary, marital status, outstanding debts, assets, and long-term financial needs. Using a cash flow analysis can help calculate the exact amount required, moving beyond just income-earning ability. I like to use the simplest acronym to determine the insurance need:
L – Loans & Liability Need
I – Income Replacement Need
F – Final Expense Need
E – Education for Kids Need
Our health status can change on a dime. Don’t let prospects use their current good health as an excuse to avoid life insurance. It’s not about buying life insurance for when we die, it’s about protecting those that we love who will live!
When debunking this “I’m too young and healthy” nonsense with younger prospects, I recommend you hit them with some thought-provoking questions that get them thinking. For example:
- “Listen, I hear you – you feel invincible and healthy today. But have you truly considered how your family members would stay afloat financially if you faced a serious health crisis? Getting an affordable permanent life insurance policy locked in now protects them if life goes sideways.”
- “What would happen to your aging parents if you were to pass away unexpectedly? Would they be able to afford the funeral costs and outstanding debts you leave behind?”
- “Do you have plans to start a family someday? How would your future children be impacted if you don’t have life insurance in place when they’re born?”
Posing questions like these can jolt younger clients into realizing that life insurance isn’t just for older individuals. It’s an affordable way to protect against unforeseen tragedies that can strike anyone at any age.
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Myth #3. I Have Group Life Insurance Policy Through My Job, So I Don't Need Additional Coverage.
Folks, this next life insurance myth is one I hear constantly – “I have life insurance through my job, so I’m covered and don’t need additional coverage.” Oh job-provided life insurance is enough? Did you hear that folks? I guess that $25,000 payout will keep your family livin’ large!
Not many people realize that workplace group life insurance policies typically are bare-bones at best and usually max out with coverage limits far too low. Employer-based life insurance benefits are often insufficient to fully support your family members in the event of your passing.
How to debunk the "I Have Group Life Insurance Policy Through My Job, So I Don't Need Additional Coverage" myth
So what do you do? Simply educate your clients that employer-provided group policy should only be viewed as a small SUPPLEMENT to a robust personal life insurance policy. Here’s how I break it down:
“Your employer’s group life insurance policy is a nice perk. BUT it’s in no way enough coverage to financially protect your family members and maintain their current lifestyle if something happened to you. We need to secure additional permanent policy or term life insurance equal to 10-20 times your income through a personal policy.”
Another crucial limitation of workplace policies that you should bring up 100% is that the coverage is temporary. If they change jobs, quit, or get fired for drinking off the clock, they can kiss that measly payout goodbye. Sounds like common sense, right? But let me tell you, many folks don’t realize it until they’re knee-deep in regret and wishing they’d paid attention to the fine print instead of daydreaming about their next vacation.
Myth #4: Life Insurance is Just a Death Benefit.
“Life insurance is just a death benefit?” Well, no kidding, Captain Obvious! I guess those greedy insurance fat cats have been holding out on us, keeping their secret ‘Live Forever’ policies all to themselves!
We know that certain permanent life insurance policies, such as cash value life insurance, can provide so much more than just a death benefit. They can be powerful financial vehicles that allow your clients to build cash value within the life insurance policy, which can be used through withdrawals or loans while they’re still living.
As their insurance agent, it’s your job to creatively shatter their narrow-minded view.
How to debunk the "Life Insurance is Just a Death Benefit" myth
When debunking the “life insurance is only for death” myth, I find it effective to hit prospects with some enticing questions to get them thinking bigger. Here’s what I mean:
“Alright Joe, let’s do some dreaming here. What are your plans for retirement? Do you want to maintain your current lifestyle and travel?”
Or “I know, I know – you’re the type that wants to leave a sweet inheritance to your spoiled kids so they never have to work a day in their lives. Am I right or am I right?”
Life insurance also provides essential financial support to your dependents, ensuring they can cover expenses, pay off debts, and maintain their current lifestyle in the event of your death.
The point is, you need to get creative and reframe their mindset. Like Zarir Dadinatha on the Discovery Series podcast, “I always tell them that insurance is not an expense. Insurance is an investment.”
Then educate them on how the right permanent life insurance policy with its cash value can make their fantasy a reality by accumulating wealth and supplementing their retirement income! Cha-ching!
Just like Chiara likes to say, “there are different types of products that help you achieve your goals” beyond just basic death protection. “Let’s try funding it through… critical illness. Hey, how about if we do forced savings through a Critical Illness solution? Your goal is to stay healthy and we’ll return your premiums to you.”
So the next time your client tries feeding you that “life insurance is just a death benefit” myth, make sure you hit them with some teasing scenarios and thought-provoking questions. That’ll really get those engines revving.
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Myth #5. Life Insurance Is Too Expensive.
People complain about life insurance products cost like they’re luxury items. “Yeah, I’d love to secure my family’s future, but have you seen the price of avocado toast these days?” Priorities, man!
I can’t tell you how many times prospects try to claim life insurance costs are outside their budget.
Your typical life insurance policies can fit within any reasonable financial plan and budget when structured properly. Different life insurance companies offer various affordable options tailored to individual needs.
How to debunk the "Life Insurance Is Too Expensive" myth
One of my favorite ways to debunk the “it’s too expensive” myth is by relating life insurance costs to other non-essential expenses clients spend money on regularly without a second thought.
You can say something like: “Have you truly looked at affordable term life insurance policies and the actual cost? With a modest term life insurance policy, you could financially protect your family for pennies a day – less than your morning coffee!” Use a relatable example like Chiara’s “Literally a cup of coffee a day can get you something” analogy to put the costs into perspective for them.
“How much do you spend each month on going out to restaurants or ordering delivery food?”
“What’s your monthly cable/streaming subscription costs for channels you hardly watch?”
Or just like Chiara did with her example of funding a child’s education plan by cutting back on cigarettes: “Do you know that we can fund your child’s education plan if you cut back one pack of cigarettes a day?”
Show no mercy in highlighting how life insurance premiums are literally just a drop in the bucket compared to the dumb luxuries they already waste money on daily. If a client can swing their daily Starbucks fix, restaurant splurges, or cigarette habits, they can certainly afford proper life insurance coverage. Take it from my good friend Mike Vieira on his podcast about concept of cutting a pack of smokes a day to afford smoker rates on Critical Illness insurance.
The truth is, sticker shock usually comes from oblivious ones who assume they need Powerball-level coverage. That’s when you need to educate them on inexpensive term life options that cost pennies per month while still providing a fat death benefit payout.
Myth #6: Savings are Sufficient Instead of Life Insurance.
As if having a simple savings account could adequately provide for your family long-term financial needs in the worst-case scenario.
Because the cold hard truth is, for the vast majority of families, even a seemingly large savings number gets depleted pretty quickly when it’s the sole resource for paying ongoing expenses like mortgages, education costs, car insurance, healthcare, and more after you’re gone. Especially if you consider current inflation!
For most, it’s pure delusional fantasy on the same level as those FOMO-addicted gamblers who keep dumping their life savings into meme stocks like GameStop based on advice from TikTok finance bros.
How to debunk the "Savings are Sufficient Instead of Life Insurance" myth
When you get hit with that objection, you can respond just like my friend Chiara Missalino: “How long is your savings going to last? Is your savings growing? Is it growing enough to sustain you into the future?”
One tactic I also find effective is using hypothetical scenarios to illustrate the limitations of relying solely on savings. For example:
Ask your potential clients: “Let’s say your savings could cover 5 years’ worth of your family’s current living expenses. But what happens after that? How will your kids afford university? How will your spouse pay the mortgage long-term?”
“Have you truly calculated how much ongoing income your family would need to maintain their current lifestyle if something tragic occurred? Most people underestimate how quickly savings get depleted.”
Or “What if your family encountered a significant unexpected cost while relying just on savings, like a medical emergency? All those funds could be wiped out instantly.”
Posing these types of scenarios gets potential clients thinking more long-term. Show them how an affordable life insurance policy with a fat tax-free death benefit payout could provide exponentially more financial security than relying on their limited savings account.
Your savings may seem sufficient for the short-term coverage, but is it truly enough to “sustain you into the future” for decades? What happens when those funds inevitably get depleted?
Simple math that savings rarely add up for most people. Motivate them to secure appropriate life insurance coverage today.
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Myth #7. I Can Get Life Insurance Later When I'm Older.
One of the most dangerous life insurance myths is when prospects, especially younger people, think they can just put off getting coverage until later in life. “I’ll get life insurance when I’m older” is a classic line, but it’s total nonsense.
Waiting until you’re older to get covered is the plan? Yes, please hold off until your cholesterol is higher than your income – those rates will be a steal!
During the podcast, Chiara shared her powerful family story that highlights the risks of this life insurance myth. Her father suffered a massive heart attack at just 48 years old. “He was working all day… and all of a sudden there’s an ambulance and paramedics coming… I thought it was my grandmother because she’s the one that had the heart problem… It was my dad.”
After that first near-death experience, her Dad then has ANOTHER heart attack soon after, followed by a stroke that forced him to stop working entirely. Can you imagine the financial nightmare for Chiara’s family without proper health and life insurance being in place?
Chiara’s mother also faced severe health battles with brain tumors starting at age 33 and then breast cancer – again, at a very young age. This shows how health can deteriorate suddenly, even for those currently young and healthy.
The truth is none of us has a guaranteed timer on when our bodies are gonna start going haywire. Relying on the arrogant assumption that you’ll stay perfectly insurable until some magical future age is about as smart as playing Russian roulette with a semi-automatic.
How to debunk the "I Can Get Life Insurance Later When I'm Older" myth
When debunking the “I’ll get it later” myth, I find it effective to lay out the cold hard facts and math that make delaying life insurance so costly and ill-advised:
“Every single year you delay locking in an affordable life insurance policy, the premiums get exponentially more expensive as you get older and your health inevitably deteriorates. A basic life insurance policy that could’ve cost you $X per month at age 25, might run you 4 times more expensive just 10 years later after you’ve blown out both knees and your liver is failing. If you wait until you’re 50, it will be even more expensive. And that’s assuming you still even qualify for coverage by a decent life insurance company, which is a huge ‘IF’.”
And finish off with something along these lines:
“But let’s say you do qualify still. We’ve already established that the premiums will be way higher than if you got covered now. But here’s the real kicker – the coverage amount will be LESS! So by waiting, you get WORSE coverage at a HIGHER cost. Sound like a bad deal to me!” Kinda reminds me of that overpriced monstrosity my pal David Lee chugs every morning from Starbucks. You know, the large coffee with oat milk?
Showing the premium difference in real dollar amounts drives home how waiting is not a good idea financially. You can also explain how delaying makes it more likely to get denied coverage entirely for health reasons.
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Myth #8: Health and Life Insurance Is Just for the Main Income Providers.
Another infuriating life insurance myth we need to take down is when prospects claim “only the breadwinner in our family needs life insurance coverage.”
Only the paycheck earners need insurance? What a brilliant take! I had no idea that stay-at-home parents just lounge around all day without providing any actual value to the family!
How to debunk the "Health and Life Insurance Is Just for the Main Income Providers" myth
When debunking this life insurance myth, I find it’s important to acknowledge the monetary value of the responsibilities handled by non-income earners. For example:
“If your stay-at-home spouse were to pass away unexpectedly, could you afford to pay for childcare, household tasks, transportation and other services they provide on a daily basis? Those costs add up rapidly!”
Or hit them with: “What about all the unpaid labor your spouse puts in caring for your parents? You think nursing homes are cheap? Without them, you’re looking at pumping out $100K annually!”
Quantifying all the monetary value the stay at home parents provides in tangible dollar amounts puts things in perspective. It drives home just how absolutely essential it is to insure both adults, regardless of employment status.
The sad truth is I see this oversight happening constantly – families skimping on coverage for the non-income earning spouse, as if they just sit on their butt all day without contributing anything of value. Failing to insure the stay at home parent is a massive financial mistake that can completely disrupt the entire household.
A non-working spouse’s passing can massively disrupt the entire family’s way of life if there aren’t sufficient insurance proceeds to sustain their contributions and living standards. Their intangible roles are absolutely vital!
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Myth #9: Life Insurance is Too Complicated.
You know, one of the most frustrating objections insurance agents constantly have to deal with is when clients claim “Life insurance is just too complicated and confusing to even bother with.” As if having a basic understanding of how to protect their family’s financial future is some sort of Herculean task reserved only for MIT geniuses!
Just like my friend Chiara Missalino put it during our podcast chat: “Life insurance isn’t just one product for one person. There’s different types of products that help you achieve your goals.” While there are various life insurance policy options, the fundamentals aren’t actually that complex when they have a financial advisor to guide them.
How to debunk the "Life Insurance is Too Complicated" myth
When debunking the “it’s too complicated” myth, one of my go-to tactics is to first ask them some basic questions about their current lifestyle costs and financial obligations. Things like:
“How much is your current monthly mortgage/rent payment?”
“What are your estimated annual expenses for utilities, groceries, transportation, etc.?”
“How much do you think you’ll need for future costs like your kids’ education?”
Then run simple income replacement calculations to determine an appropriate life insurance coverage amount. Lay it all out in dollars to show just how straightforward it truly is. All they need to understand is that it’s really just about securing a lump sum payout that can cover all those ongoing expenses and obligations if something were to happen to them. That’s it!
Yet for some inexplicable reason, people try justifying their refusal to get coverage by claiming “it’s just too confusing and complicated.” As if having a basic grasp of their monthly bills and long-term financial needs is like solving Rubik’s cube while scrolling through TikTok. An impossible task!
By quantifying their current financial needs, you can reframe life insurance as just a simple solution for ensuring those costs get covered, rather than some big confusing mystery. It’s all about protecting their existing lifestyle. Put emphasis on that. It works wonders!
For them, at its core, life insurance is simply: “Let’s calculate how much coverage your family members would need to avoid any financial hardship or disruption to their current way of life if you passed away.” That’s not so complicated, is it?
Myth #10: I Don't Have a Family. I Hate My Kids.
You know, one of the most outrageous objections I’ve heard is when someone actually says “I don’t need life insurance because I don’t have a family and/or I hate my kids!” Can you believe the insensitivity and selfishness of that statement?
Just like my pal David Lee pointed out so well, the reasons for getting life insurance go far beyond just providing for dependent children. As he said: “For me, it was loving my parents. That’s why I got life insurance at a young age.”
Too many people fail to consider the outstanding obligations and potential burdens they could leave for loved ones, even if they’re single or estranged from their kids. It’s a dangerously narrow-minded view.
How to overcome the "I don't have a family. I hate my kids." objection
When you get hit with that objection, one effective tactic is using some hypothetical scenarios to highlight all the loose ends they’d be leaving behind:
“Okay, so let’s say you pass away unexpectedly. Who is going to cover the costs of your outstanding debts? What about your final expenses like medical bills, funeral costs, legal fees? Those can easily exceed tens of thousands of dollars out-of-pocket for your family.”
Hit them with some harsh realities to make them realize the financial chaos they could create.
Even if you’re not close with your kids, is it really fair to potentially uproot their living situation because you didn’t plan ahead? An affordable term life insurance policy can ensure they’re protected.
When debunking the “no family, no need” myth, I also find it effective to remind clients that life insurance doesn’t just cover dependents. The death benefit can actually protect a wide range of potential beneficiaries, including:
- Aging parents or grandparents you support financially
- Charitable causes or organizations you’re passionate about
- Leaving an inheritance for future descendants like nieces/nephews
As an advisor, it’s your job to creatively illustrate all the financial burdens and obligations they could be leaving behind for their relatives to deal with. Don’t let the myth of “no kids means no responsibility” prevent you from getting proper affordable coverage that provides peace of mind.
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Conclusion
You know, at the end of the day, being a successful financial advisor isn’t just about mastering a sales script, guys. Just like my friend Chiara Missalino shared, it’s about truly understanding the doubts, misconceptions, and flat-out myths that prospective clients bring to the table.
But here’s the thing, each of these persistent myths can be creatively debunked when you take the time to acknowledge the root of the client’s concerns. Whether it’s using vivid hypotheticals like Chiara did to expose the flaws in their logic, presenting cold hard facts and data that contradict their assumptions, or maybe having a little fun and poking holes in their financial ignorance. You’ve got to get strategic!
The bottom line is that overcoming life insurance myths requires reframing your prospect’s entire mindset, guys. You have to be willing to challenge those preconceived notions head-on, while still maintaining professionalism and building trust. Don’t just dismiss their doubts as silly or uninformed. Understand where they’re coming from, and guide them towards the truth.
Disclaimer: The following information is being presented on the understanding that it is intended for information purposes only. None of the presenters or Desjardins Insurance has been engaged for the purpose of providing legal, taxation, or other professional advice. No one should act upon the examples/information without a thorough examination of the legal/tax situation with the appropriate professional advisors.
About the Author
Reh Bhanji (Certified Financial Planner, Chartered Life Underwriter), a veteran in the insurance and financial advisory industry, boasts over 25 years of experience. His journey began in 1998 at Imperial Life Financial in Toronto, ON, where he managed over $40 Million in annuity assets. His prowess quickly earned him a promotion to Team Leader in 2002, where he led a team of financial advisors. In 2005, Reh’s expertise propelled him to the role of Regional Sales Director at Desjardins Financial Security. In this role, he was responsible for training financial advisors and driving life and health insurance sales through strategic marketing and business development. His commitment to financial advisor education was further exemplified between 2007 and 2009, serving as Vice President for Education at Advocis Toronto (The Financial Advisors Association of Canada). In 2012, he became Senior Regional Sales Director at Desjardins Financial Security. At Desjardins, he managed the company’s largest account and developed key sales strategies and business building techniques for life and health insurance solutions. His exceptional leadership skills led to his 2020 promotion to National Best Practice Leader at Desjardins Financial Security, where he spearheaded the coaching and development of sales processes across the national network. In 2021, Reh expanded his influence as the host of the award-winning Discovery Series Podcast by Desjardins, providing a platform for industry-leading financial advisors to share their strategies, success stories, and industry leading insights.
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