Busting the 5 Biggest Myths About the Insurance Licensing

According to the Global Insurance Market Index, Global commercial insurance prices increased by approximately 15% in the second quarter of 2021.

15:25 20 August 2021

• According to the Global Insurance Market Index, Global commercial insurance prices increased by approximately 15% in the second quarter of 2021.
• This marked the 15th consecutive quarter of rate increases in the global commercial insurance market. 
• Global property insurance pricing was up approximately 12% on average- a step down from the 15% increase that was seen in the first quarter 2021.

 

When it comes to the insurance industry, persons (generally) tend to either be significantly under-insured, or greatly over-insured. This is rather unfortunate, as insurance is (and should be) one of the most fundamental aspects of persons’ financial plans.

 

This is because- unlike other financial goals, being properly insured is urgent to the extent that you do not know when the need for it will arise; needing it and not having it can have detrimental consequences for both yourself and for your family. 

 

Most persons are either learning about insurance from insurance agents- individuals who have obtained an insurance license that allows them to legally sell insurance policies within a specific state (and within a specific line of authority), or they just end up avoiding the topic of insurance all together (due to procrastination, denial or a bit of both).

 

As a result of this aforementioned lack of adequate information, a prolific number of myths have arisen in the last couple of years. Below we will explore the top five industry myths about the insurance industry that are (fortunately) not true.

 

1) Health Insurance is too Expensive

According to recent government surveys, approximately 15% of Americans still do not have adequate health insurance coverage. 

 

Of that 15%, over 46% were unaware that they were legally required to be insured (and consequently were liable to face fines as a result), and roughly 42% did not know that they were eligible for certain subsidies that could make health insurance much more affordable- particularly for lower-income and disadvantaged individuals.

 

Unfortunately, a very high number of individuals still do not recognise: a) just how affordable health insurance can be (particularly when certain subsidies are involved), and b) how expensive the exorbitant costs that are associated with not having insurance (including tax penalties) can be.

 

Many employees are also currently afraid to retire before they can qualify for Medicare (at the age of 65). This is despite many of them being eligible for subsidies which make health insurance costs extremely affordable (even in comparison to lower-income Americans).

 

This is because U.S. healthcare subsidies are based on the taxable income of an individual, and retirees can reduce this heavily by opening up a tax-free Roth account before they turn 65.

 

2) Disability Insurance is Unnecessary

Lack of disability insurance is particularly troubling. This is because, from a statistical perspective, individuals in America are currently much more likely to become disabled before they retire than they are to actually pass away.

 

Most long-term disabilities are not work related, and this means that most persons will also be ineligible for workers compensation. When considering that over 70% of private employers also do not offer long-term disability insurance, the extent of vulnerability in this area seems to become increasingly apparent. 

 

It should also be noted that even if an individual is covered at work, they will likely need a supplemental or additional insurance policy. This is because such benefits are seldom available to you after you leave your work, which you may have to if you have to deal with a personal and unaccounted for disability in the future. 

 

3) Your Employer-Provided Life Insurance is Satisfactory

Employer-related policies generally tend to pay your family or any other beneficiaries you may have your annual salary. This should leave you in good hands if all your family needs to get by is your annual income. If this is not the case, however, you will likely benefit from acquiring additional life insurance coverage. 

 

Obviously, if you have no dependents you may require no life insurance at all.

 

4) Medicare Covers Long-Term Care

In fact, it does not. Medicaid, on the other hand, does cover long-term health care, but this is only where an individual has burned through all of his or her assets (including anything that they gave away or donated in the last five years). 

 

Consequently, Medicaid can take a very significant time to kick in, and this means that a one-off incident can have very destructive complications on an individual’s finances. 

 

Having said that, it should be duly noted that long-term healthcare insurance can be very expensive as well- unlike life insurance. A relatively easy way to reduce your total costs in this area is by seeing whether your state offers a long-term care partnership program. 

 

If it does, you may want to try purchasing a policy through such a program and use up all of your benefits. You are allowed to keep a proportional number of assets to the insurance coverage you paid for, and Medicaid should be able to cover the rest of the bill with ease. 

 

This can ensure that you purchase enough insurance to cover your assets without having to pay exorbitant and unnecessary costs preemptively.

 

5) Umbrella Liability Insurance is Only for the Very Wealthy

From a legal standpoint, if an individual’s assets (including their home equity and retirement accounts) exceed the liability limits on their renter’s or homeowner’s insurance policy, they could find themselves battling a very large lawsuit.

 

An umbrella policy can ensure that a person’s legal costs are covered if such an occasion arises, and could consequently ensure that even when a person does get a favourable decision in a legal battle, their savings haven’t been completely diminished in the process.

 

A Final Take

Indubitably, the topic of insurance may not be the most favourable or exciting, but not sufficiently contemplating why you need it (and how to best incorporate it into your life so as to tailor to your specificities), can significantly handicap both you and your family in the future, and so it remains absolutely crucial.

 

We hope you enjoyed reading.