Key Takeaways

  • About three-quarters of adults overestimate the cost of life insurance, often by 3–12Γ—, according to the 2025 Insurance Barometer Study by Life Happens and LIMRA.
  • Not knowing how much or what type to buy is the single most-cited reason people without coverage give for not buying it.
  • Employer group coverage is usually only 1–2Γ— your annual salary β€” often far short of what a real coverage calculation suggests.
  • A death benefit is generally not subject to federal income tax β€” a common myth says otherwise.
  • Velaz Life helps you get real, personalized answers β€” we're an advisory team, not the insurer issuing the policy.

Myth: "It's Too Expensive"

Myth

"Life insurance costs way more than I could afford."

Reality

About three-quarters of adults overestimate the true cost of life insurance β€” younger, healthy adults often assume it costs 3 to 7 times more than it actually does, per the 2025 Insurance Barometer Study by Life Happens and LIMRA. A typical starting point for a healthy adult on a standard term policy runs well under $20/month. See our real cost vs. perceived cost breakdown for the full picture.

Myth: "I'm Too Young to Worry About It" (or "Too Old to Bother")

Myth

"I'll get coverage later, when I actually need it."

Reality

Rates are based on your age and health at the time you apply β€” locking in coverage earlier generally means a meaningfully lower rate for the same amount, not a reason to wait. And on the other end, "I'm already too old for this to make sense" is just as much a myth: coverage remains accessible well past your 40s and 50s, and no-exam or guaranteed issue options exist specifically for later in life.

Myth: "I'm Single, I Don't Need It"

Myth

"I don't have a spouse or kids, so life insurance doesn't apply to me."

Reality

Being single doesn't mean no one depends on you financially. Co-signed debt, aging parents, or other family members who rely on your income are common reasons single people carry coverage too.

Myth: "My Job's Coverage Is Enough"

Myth

"I already have life insurance through work β€” I'm covered."

Reality

Most employer group policies provide only 1–2Γ— your annual salary β€” often well short of what a real coverage calculation suggests, and coverage usually ends when you leave the job. Try our coverage calculator to see how your actual number compares.

Myth: "The Payout Is Taxable"

Myth

"My family will lose a big chunk of the payout to taxes."

Reality

Death benefits are generally not subject to federal income tax. Exceptions can apply in specific situations β€” such as interest earned on a delayed payout, or very large estates β€” so this isn't tax advice; check with a tax professional about your specific situation.

Myth: "I Don't Know What to Buy, So I'll Just Wait"

Myth

"There are too many options β€” I'll figure it out later."

Reality

Not knowing how much or what type to buy is the single most-cited reason people without a need gap give for not buying coverage. That's exactly what a coverage calculator or a real conversation with a licensed advisor is for β€” it turns "I don't know" into a real number in a few minutes.

Myth: "Stay-at-Home Parents Don't Need Coverage"

Myth

"They don't bring in a paycheck, so there's nothing to replace."

Reality

Childcare, household management, and the other work a stay-at-home parent does has real economic value β€” replacing it (childcare costs, help around the house, and more) is exactly what a policy sized for that parent can cover.

Myths by Product Type

Each type of policy has its own specific myths worth knowing before you compare options:

Term Life

"It doesn't pay out unless something dramatic happens," and more.

See term life myths β†’

Whole Life

"The cash value is basically a savings account," and more.

See whole life myths β†’

Indexed Universal Life

"It's the same as investing in the stock market," and more.

See IUL myths β†’

Final Expense

"The payout can only be used for the funeral itself," and more.

See final expense myths β†’

No Medical Exam

"No exam means no underwriting," and more.

See no-exam myths β†’