Life Insurance - Misconceptions
Misconception - People with medical problems cannot get insurance.
"Rated" life insurance policies carry an increased premium to account for the additional risk an insurer takes. Graded life insurance can bought for people who have more serious medical conditions, providing they are not terminal.
Misconception - Once I buy life insurance, I can't lower the payment on that policy.
After a certain time period (6 months to 2 years) if your as health improves dramatically (i.e. , losing weight, being declared cancer free or quitting smoking), you can ask for a reconsideration of your life insurance rate.
Misconception - Insurance carriers raise rates whenever they want.
The insurance lobby is very powerful and contributes millions to different politicians. However, each state has a regulatory body that oversees insurance companies. Regulators who review the information companies collect as well as the rates they charge; insurers cannot deviate from these rates.
Misconception - Getting life insurance from my auto or home insurance carrier will save me money.
There is a multi policy discount, however, many companies make up for low margins on auto or home insurance by charging more for life and vice versa. Companies can vary wildly in prices based upon their loss history and underwriting. The multi policy discount may or may not make your auto insurance cheaper.
Misconception - My dangerous hobby will make me unable to get life insurance.
Insurers will look at everything that could shorten your life expectancy, such as amateur aircraft piloting, skydiving, motorcycle or auto racing. These can increase your rates significantly. However cigarette smoking, cholesterol, ratios of good cholesterol to bad cholesterol, weight, past medical history also weight heavily and someone with a high risk hobby may still get coverage if they are in excellent health.
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