4 biggest misconceptions about life insurance & why you should get it in your 20s

We get it, stats can be a little boring, but not when they can give us insight about ourselves that we can take advantage of! So, when we came across this survey from RBC Insurance, we were intrigued.

It revealed that, as compared to 35-54-year-olds, millennials aged 25-34 are more actively conscious of their finances (69% vs 54%), have fewer consumer debts (37% vs 46%) and have more saved up for job loss (38% vs 24%) or health emergencies (26% vs 17%). Ironically, the same financially woke millennials don’t consider life insurance as a key part of their financial portfolio. This is despite the fact that a majority of them understand that life insurance policies have some merit.

Turns out, the primary reasons they cite for not having a policy are nothing but mere myths. So, here we are, busting- with expert help, of course- four most common misconceptions about life insurance policies…

Myth: Life Insurance Policies are for when I’m older

Truth: This is, by far, the most common myth about policies and is utterly untrue. The simple logic is that the healthier you are, the lesser your premium will be. So, when you start young and in the best of health, you lock in a lower premium. In the overall span of the policy, this can save you a lot of money. Even better, you lock in your healthy lifestyle as of today, so when your life changes in the future, and if your health changes, you already have life insurance in place.

Myth: Life Insurance Policies are not for singles

Truth: It is a common perception that if you’re not married or don’t have kids, you don’t need a policy. That might be true if you had no family whatsoever. But for most of us, we have parents we want to support, siblings we want to help and charities we want to donate to. Your policy especially comes in handy if you have a co-signed debt or loan. The money from the policy can rid the co-signer of that burden.

Myth: Life Insurance Policies are heavy on the budget

Truth: This one might have some truth to it. Life insurance can be an expensive affair, but it doesn’t have to be. Selecting a plan that provides the option to change it later allows you to meet your budget now, and in the future when your life changes. For the most part, you can customize your insurance to suit your needs, lifestyle and budget. For example, RBC Insurance has plans that cost less than $15* per month – that’s like one takeout lunch!

Myth: Life Insurance Policies are useless until I pass away

Truth: This can be true if you purchase Term life insurance and don’t consider the value it represents for those you may leave behind. But depending on your needs and budget, there are products that combine insurance with investments. Term Policies cover you for a defined period of your choice, usually between 10-40 years and are more affordable (they can continue longer than the defined term if needed). On the other hand, Whole Life policies (those that are in place for your entire life), also have an investment component, where cash inside the policy can grow on a tax-deferred basis. Meaning, you don’t have to pay tax annually on the growth from the dividends paid. You can borrow against the cash value of your policy to buy a home, or cover expenses if you lose your job or any other emergencies.

Frankly, after spending the past two years in an environment of unpredictability, it only makes sense to secure your financial portfolio by adding life insurance to it. If you’re contemplating investing in one, we suggest you discuss it with an RBC Insurance Advisor. For starters though, check out their website.

*Premium of $12.08 male or $10.76 female, based on $100,000 coverage for a 20-year-old non-smoker, for a 10-year term. Learn more about the survey here.