Insurance. It’s something we all need but often don’t know where to start. From ignoring the need for life insurance due to youth or good health, to fearing for the potential costs of the combination of health insurance, home insurance, pet insurance, and car insurance – the idea of doing the research and making a decision is often too much. But this is perpetuated by the industry’s many myths and misconceptions. Let’s debunk them to get a clearer picture of the insurance landscape.
Myth 1: All insurance is expensive
A pervasive myth is the assumption that insurance policies are prohibitively expensive. However, a study from the Insurance Information Institute shows that the average cost of homeowners insurance is about $1,398 annually, as of 2021. While this may seem substantial, it pales in comparison to the potential cost of uninsured accidents or home damage.
Advancements in Insurtech have made policies more accessible and affordable. Innovative tech like AI-powered risk assessment tools allows companies to offer personalized policies based on individual risk profiles, leading to more affordable premiums for many.
Myth 2: Purchasing insurance online is risky
Some believe that purchasing insurance online is less secure and more prone to fraud. However, a study by COMEOS revealed that the majority of respondents (94%) are considering buying insurance online in the future, and 80% already do. In over half of cases, the main driver for purchasing online was convenience, and fraud was not highlighted as an issue.
Insurtech also provides benefits such as easy policy comparisons, instant quotes, and swift claim processing, further enhancing the online insurance purchase experience.
Myth 3: Life insurance is unnecessary for the young and healthy
Many young adults operate under the belief that life insurance is unnecessary until they are older or have dependents. The 2022 Insurance Barometer Study from LIMRA found that 35% of millennials say they don’t own life insurance because it is too expensive, however 80% of millennials overestimate the cost of life insurance.
Obtaining life insurance at a younger, healthier age means cheaper premiums and long-term financial security.
Myth 4: Home insurance covers all natural disasters
Many homeowners believe their standard insurance policy will cover all natural disasters, but this isn't always the case. For instance, according to the National Association of Insurance Commissioners, standard policies typically don't cover flooding or earthquakes.
Technology can help bridge this knowledge gap by offering intuitive digital platforms that clearly explain policy coverage and limitations. Furthermore, AI-powered chatbots can answer queries 24/7, providing instant clarification for policyholders.
Debunking these myths not only aids in making informed decisions but also highlights the positive aspects of the insurance industry, like its adaptability and increasing reliance on technology. By harnessing the power of technology, the insurance industry can offer improved transparency, customization, and accessibility, allowing customers to gain the most from their policies and shed any existing misconceptions.