7 life insurance myths and facts

Life insurance can feel confusing, and sometimes what you hear just isn’t true. Let’s clear things up. Below are seven common life insurance myths—along with the facts that can help you decide what’s right for you, your budget, and the people you love.

Myth: Life insurance is too expensive.

Fact: Many people assume life insurance costs more than it actually does, and that can keep them from exploring their options at all. The truth is—at American Family Life Insurance Company, for example—a healthy 30-year-old female may be able to get a 20-year, $250,000 DreamSecure Choice Term Life Insurance policy for less than $15 per month.*

Your price depends on factors like your age, health, the coverage amount you apply for, and the type of policy you choose. And when you think of life insurance as financial protection for the people who matter most, it’s easier to see where it could fit into your budget.

If you’re curious, an American Family Insurance agent can help you compare options and find coverage that makes sense for you.

Myth: Life insurance isn’t important right now because I’m young and single and I don’t have any dependents.

Fact: Life insurance can support your financial plan, even without dependents. While loved ones may not rely on your income today, they could face unexpected costs in the event of your death—unpaid debts, like credit cards or a car loan, and final expenses, such as funeral costs. Life insurance can help reduce that financial burden.

Also keep in mind that getting coverage when you're young and healthy may help you qualify for a lower premium than you would get later in life since coverage typically costs more as you age.

If you’re looking for lifelong coverage, a permanent policy like DreamSecure Whole Life Insurance may build cash value that you can borrow against later.** That money could help support goals like buying a home, paying for college, adding retirement income, or investing in a business. The earlier you start, the more time cash value may have to grow.

Myth: I have life insurance at work, so I don't need a personal policy.

Fact: Employer-provided life insurance can be a valuable benefit, but it might not be enough to provide for your family long term. A typical payout is only around twice your base salary. And if you change or lose your job, that coverage doesn’t always follow you. A personal life insurance policy helps ensure your coverage isn’t tied to your job.

Myth: My kids are grown, so I don't need life insurance anymore.

Fact: You might be an empty nester, but life insurance can help protect what you’ve built. It can assist with your end-of-life costs, like funeral expenses, and it may help with other outstanding debts, such as medical bills, hospice costs, or a mortgage.

Some people also choose life insurance as a way to leave a financial gift to their children or other loved ones.

Myth: It’s always better to put my money in savings instead of life insurance.

Fact: Many people prefer to build savings and carry life insurance since they serve separate purposes. Savings can help with planned expenses and emergencies. Life insurance helps provide financial protection for your loved ones if you die—and it may be difficult to save enough on your own to match what a life insurance policy could provide as a death benefit.

Your American Family agent would be happy to walk through options with you so you can decide how life insurance may fit into your financial goals.

And remember, some life insurance policies can build cash value that you may be able to borrow against while still providing a death benefit for beneficiaries.**

Myth: I'm a stay-at-home parent, so I don't have an income I’d need life insurance to replace.

Fact: Even if you don’t earn a paycheck, your family may depend on the support you provide every day. Consider the cost of childcare alone. In many households, it amounts to one parent’s income. If you were to pass away, your surviving spouse or partner may need to pay for childcare and other services you currently provide. Life insurance can help cover those costs, giving your family more flexibility and support during an already difficult time.

Read more about life insurance tips for new families.

Myth: Life insurance is overwhelming, and there are too many options.

Fact: Life insurance can seem like a lot at first, but you don’t have to figure it out alone. We offer resources to help you better understand the basics and explore your options. Your American Family Insurance agent is ready to answer your questions, explain types of life insurance coverage, and help you choose a policy that fits your life. The more you understand, the more confident you’ll feel that you’ve done your best for those who mean the most.

This information represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Exclusions may apply to policies, endorsements, or riders. Coverage may vary by state and may be subject to change. Some products are not available in every state. Please read your policy and contact your agent for assistance. 

The words lifetime, lifelong, and permanent are subject to policy terms and conditions.

*Premium estimate based on the Select underwriting class for a DreamSecure Choice Term Life Insurance policy.

**Any loans taken from your life insurance policy will accrue interest. Any outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim or from the cash value at the time of surrender. If the loan balance grows too large for the cash value to support it, the policy could terminate.

Policy Forms: ICC25 L101 MS 09 25, ICC17-225 WL, ICC17-227 WL, ICC17-228 WL, ICC17-223 WL, ICC17-224 WL, ICC21 L141 MS 01 22

Life insurance underwritten by American Family Life Insurance Company, 6000 American Parkway, Madison, WI 53783.