Debunking Myths About Life Insurance Costs

12 December 2025

Life insurance is one of those topics that tends to make people uneasy. Some think it's too expensive, unnecessary, or just too complicated to bother with. But here's the thing—many of the beliefs people have about life insurance costs are just myths. And these misconceptions could be preventing you from getting coverage that could protect your loved ones financially.

So, let's cut through the noise and debunk the biggest myths about life insurance costs once and for all.

Myth #1: Life Insurance Is Too Expensive

This is by far the most common misconception. Many people assume life insurance costs hundreds of dollars a month, but the reality is much different.

In 2023, a study by LIMRA found that more than half of Americans overestimate the cost of life insurance by three times its actual price. For example, a healthy 30-year-old can get a $250,000 term life policy for around $15 to $30 a month—less than some people spend on coffee.

The cost of life insurance depends on factors like age, health, and lifestyle. If you're young and healthy, chances are you'll qualify for affordable rates. The longer you wait, the more expensive it gets.

Bottom Line:

Life insurance is more affordable than you think. In fact, for the price of a few streaming subscriptions, you can secure financial protection for your loved ones.

Myth #2: The Policy Through My Employer Is Enough

Many employers offer life insurance policies as part of their benefits package. This is great, but there’s a catch—it’s usually not enough.

Most employer-provided life insurance policies offer coverage that equals one to two times your annual salary. That sounds like a decent amount, but consider this: If you earn $50,000 a year, a 2x salary policy would only provide $100,000 in coverage. Is that enough to cover a mortgage, debts, or your family's expenses for years to come? Probably not.

And here’s another problem—if you leave your job, you lose your coverage. Your employer’s policy isn’t portable, which means if you switch jobs or get laid off, you may find yourself without any life insurance at all.

Bottom Line:

Employer-provided life insurance is helpful but usually not enough. A personal life insurance policy ensures you have full coverage regardless of your job status.

Myth #3: Stay-at-Home Parents Don’t Need Life Insurance

If you’re a stay-at-home parent, you might think life insurance isn’t necessary since you don’t have an income. But let’s break this down for a second—what would happen if a stay-at-home parent were to pass away suddenly?

Think about all the services they provide:

- Childcare
- Housekeeping
- Meal preparation
- Transportation
- Education support

Replacing these services could cost tens of thousands of dollars per year. A life insurance policy for a stay-at-home parent ensures that the surviving spouse can afford childcare and other essential services without struggling financially.

Bottom Line:

Even if you don’t earn an income, your contributions have significant financial value. Life insurance can help protect your family in your absence.

Myth #4: Life Insurance Gets More Expensive as You Age, So It’s Too Late for Me

Yes, life insurance is cheaper when you're young and healthy, but that doesn't mean it's unattainable if you're older. There are still plenty of options for people in their 40s, 50s, or even 60s.

Term life insurance policies are typically affordable even for middle-aged individuals, and if you have health concerns, there are guaranteed-issue or simplified-issue policies that don’t require a medical exam.

While it’s true that waiting can lead to higher premiums, something is always better than nothing—especially if you have dependents who rely on your income.

Bottom Line:

It’s never too late to get life insurance. The sooner you act, the better, but there are still options even if you're older.

Myth #5: Only the Breadwinner Needs Life Insurance

This is a common but flawed way of thinking. While the primary earner in a household does need life insurance, they aren’t the only ones who contribute financially.

A non-working spouse provides invaluable contributions, and the cost of replacing those contributions can be significant. If they were to pass away, the surviving spouse might have to pay for child care, household help, or take time off work—all of which can strain finances.

Even adult children or elderly parents who depend on your financial support should be considered when deciding whether you need coverage.

Bottom Line:

Life insurance isn’t just for the breadwinner—it’s for anyone whose absence would create a financial hardship for the family.

Myth #6: Life Insurance Payouts Are Taxable

A lot of people worry that their beneficiaries will lose a big chunk of their life insurance payout to taxes. Good news—life insurance death benefits are generally tax-free.

When a beneficiary receives a lump sum death benefit, they don’t have to report it as taxable income (in most cases). However, if the payout is structured as an annuity or left in an account that earns interest, only the interest may be taxable.

Bottom Line:

For most people, life insurance proceeds go directly to beneficiaries without any tax burden.

Myth #7: I Don’t Need Life Insurance Because I’m Healthy

Being healthy is great, but it doesn’t make you immune to unexpected tragedies. Accidents, sudden illnesses, and unforeseen events can happen to anyone at any time.

In fact, getting life insurance while you’re healthy is the best time to get it because you’ll qualify for lower premiums. Waiting until a health issue arises could lead to higher costs or even disqualification from coverage.

Bottom Line:

Life insurance isn’t just for those who are unhealthy—it’s for anyone who wants to protect their loved ones from financial hardship.

Myth #8: I Have Savings, So I Don’t Need Life Insurance

Having savings is fantastic, but is it enough? Consider this:

- The average funeral costs between $7,000 and $12,000
- The average mortgage debt in the U.S. is around $200,000
- Raising a child to adulthood costs roughly $250,000

Unless you have hundreds of thousands of dollars saved and immediately accessible, life insurance can provide a much-needed financial cushion. Plus, it prevents your family from depleting savings or selling assets in an emergency.

Bottom Line:

Savings are great, but life insurance guarantees financial security in a way that savings alone may not.

Wrapping It Up

Life insurance is one of the most misunderstood financial products, and myths about its costs prevent too many people from getting coverage. The truth is, it’s more affordable and accessible than most people think.

If you’ve been putting off life insurance because of misconceptions about the cost, now is the time to take another look. A small monthly investment can provide peace of mind and financial security for your loved ones.

So, don’t let myths stand in the way of protecting your family’s future.