Three Common Life Insurance Fallacies

Though more and more citizens of Singapore are now slowly opening their minds and pockets to investing, only a slim amount of the current population has life insurance. A few years back, I also had my own misconceptions about getting one and now, I have nothing but regret for not having invested sooner, when I could have had more coverage with a relatively small premium. My loved ones and I could have benefited from it sooner.

It was only when I turned 23 that I learned to appreciate the importance of life insurance. If my college buddy hadn’t dragged me into a life insurance seminar, I would not be as illuminated as I am now. I would have continued to believe in the common misconceptions and fallacies circulated about by misinformed individuals who only see life insurance investments as money-making schemes for insurance companies. The thing is, with the right people and trustworthy information, appreciating the importance of life insurance becomes easier.

Below is a rundown of the most common myths about life insurance in general.

Life Insurance Fallacy #1: I don’t need to be insured.

Weighing in on this common response elicited by people in general, I daresay you definitely need it if you have people who are dependent on you and your income. If you are the breadwinner of your family with parents, siblings, or children as dependents, there is an even greater need for you to insure your income for the sake of these family members. The main purpose of life insurance is simply the continuation of your income in the event of your death, critical illness or permanent disability. These things can come like a thief in the night and when they do, your savings can easily flush down the drain by the cost of hospitalization and medical treatments. And even with an existing health insurance, more often than not, some critical illnesses are not covered by HMOs and if ever they are, the amount of coverage can be very small. And if you permanently lose your capacity to work on account of a disability, you will no longer have an income to pay for recurring and rising medical bills.

I know these are pretty scary notions but one thing is for sure, our time will come. Nobody in this earth will get out alive, hence, we should act as early as now for peace of mind’s sake.


Life Insurance Fallacy #2: I have no money to pay for life insurance.

Getting insured is not actually expensive. Any competent and honest financial consultant will recommend a plan that will suit both your budget and insurance needs.

Talk with your financial adviser about this and be transparent with your budget and expectations out of the investment. Furthermore, your premiums could be paid annually, semi-annually, quarterly or monthly. Withal, it all boils down to patience and discipline in setting aside an amount for the payment of premiums.

Life Insurance Fallacy #3: It can wait.

As a financial advisor for traditional and variable insurance, I always tell my clients and friends who ask for my financial opinion to get protection while you are still alive, healthy and able. Get insured while there is no need for it yet.


Ultimately, every individual goes through the same life stages with each stage corresponding to a different need. Those in their early 20s will eventually get married, have kids who will need education and then eventually reach old age and cease to earn money. As you go through each stage in life, your needs will also change, thus, it is much safer and easier if you are financially protected and prepared for each life stage. It is also common knowledge in the life insurance industry that as you grow older, your chances of getting ill increases, hence, your application to be insured has more likelihood of getting rejected.

In totality, a life insurance is, in some sense, a life hack. It is akin to a bullet proof vest as it affords protection and security on the lives of the plan holder and its beneficiaries, only in this case, the protection is financial and not physical protection from a gunshot wound.

Eventually, death will claim all of us. The exact manner, date or circumstance—we never know. Only time will tell. And time is indeed that powerful. Now since we can’t compete or run or cheat against time, the best remedy for us is to prepare ahead—prepare ourselves financially so that our bereaved loved ones will no longer be burdened with our departure from this world.




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