17 Insurance Myths That Make Your Coverage More Expensive
Insurance is one of the easiest places to overspend, and most people don’t even realize it. Bad advice, outdated assumptions, and slick marketing drive up your premiums while leaving you with less coverage than you need.
This gallery breaks down the biggest insurance myths still costing people money today, and shows how to fix them without wasting time or getting sold to.
👉 Click or Scroll to see the insurance mistakes draining your budget, and how to fix them.
Table of Contents
Insurance Myth #1: “Term Life Insurance Is Crazy Expensive.”
According to Bankrate, 47% of Americans overestimate the cost of term life insurance, and 41% admit they don’t even know what it should cost. In reality, a healthy person in their 30s can often get solid coverage for under $20 a month.
It’s one of the cheaper ways to protect your family or cover final expenses. Don’t guess, check real numbers and stop leaving money on the table.
Insurance Myth #2: “Employer Coverage Is All I Need.”
Having a job with benefits doesn’t mean you’re fully covered. Many employer plans have high deductibles or limited networks that leave gaps big enough to drain your emergency fund.
That’s where things like HSAs, FSAs, or supplemental coverage come in. Know your plan’s limits and build your own safety net around it.
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Insurance Myth #3: “Skipping Auto Insurance Isn’t That Risky.”
With inflation hitting car premiums, more drivers are skipping coverage entirely. J.D. Power data shows the share of households with at least one uninsured vehicle rose to 5.7% in early 2023.
That’s a huge gamble, one accident and you’re paying for everything out of pocket. Protect your ride and your finances.
Insurance Myth #4: “It’s Too Complicated, So I’ll Just Avoid It.”
Health and life insurance can feel overwhelming, but ignoring it won’t make it simpler, it just makes it more expensive. You don’t need to become an expert, just someone who asks smart questions and reads a few key lines.
The cost of being underinsured far outweighs the effort to understand your options. Don’t let confusion turn into a costly mistake.
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Insurance Myth #5: “Health Insurance Isn’t a Financial Priority.”
KFF polling shows that the high cost of health care is one of the biggest financial burdens on U.S. households, and it’s affecting coverage decisions. Many families delay getting insured or choose bare-bones plans to avoid the upfront cost, only to face huge bills later.
Health insurance isn’t just about care, it’s a shield for your savings. Protect your budget before an emergency wipes it out.
Insurance Myth #6: “Minimum Auto Coverage Is Enough.”
Your state’s minimum coverage is just that, the legal minimum, not full protection. One serious crash could rack up medical bills or car damage far beyond what the policy covers.
That gap becomes your personal liability. Spend a little more now, or potentially pay a fortune later.
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Insurance Myth #7: “All Life Insurance Covers Everything.”
Some people assume a life insurance policy is bulletproof, but exclusions can gut a payout. Risky hobbies, terminal illness, suicide clauses, and even pandemics may not be covered unless you read the fine print.
Ask what isn’t included before you commit. The wrong assumption here could leave your family with nothing.
Insurance Myth #8: “I Don’t Need Life Insurance Unless I Have Dependents.”
A growing number of adults assume life insurance can wait until they’re older or raising a family. That mistake leads to higher premiums and more hurdles later on, especially if health issues pop up.
Even without kids, life insurance can cover debts, medical bills, or funeral costs so nobody else gets stuck. The best time to buy coverage is before you think you need it.
Insurance Myth #9: “My Home Value Is Covered No Matter What.”
Many homeowners assume their insurance covers the full value of their property, but coverage limits often fall short. Rising construction costs, inflation, and outdated policy estimates mean you could be underinsured without realizing it.
Review your home coverage annually and make sure it reflects the actual rebuild cost, not just market value.
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Insurance Myth #10: “Supplemental Insurance Is a Waste.”
Vision, dental, and critical illness insurance often get labeled as “extras,” but that thinking can cost thousands. A single dental emergency or cancer diagnosis without extra coverage can destroy your finances.
These plans are usually cheap, and can cover what your main plan skips. A small premium now beats a giant bill later.
Insurance Myth #11: “Homeowners Insurance Is Optional If You Own Outright.”
A recent Federal Reserve study found that around 7% of American homeowners have no property insurance at all, mainly because it’s seen as too expensive.
But skipping coverage, even without a mortgage, is a high-risk move. Fire, storms, or liability claims can destroy decades of savings. If you own a home, you still need a safety net.
We also made this related Video: How Much House Can You Afford The McDonald’s Principle
Insurance Myth #12: “My Broker Always Finds the Best Deal.”
Many brokers are helpful, but they’re also paid commissions that influence what they recommend. The best policy for them isn’t always the best policy for you.
That’s why it pays to shop quotes yourself and check multiple sources. Your budget deserves more than blind trust.
Insurance Myth #13: “I’ll Buy Life Insurance When I’m Older.”
Waiting until you “need it” means paying more, sometimes a lot more. Life insurance premiums typically rise 8–10% for each year you delay, and that’s assuming you stay in perfect health.
The younger and healthier you are, the cheaper it gets, and once you lock it in, your rate stays fixed. Don’t wait for life to get more complicated and expensive.
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Insurance Myth #14: “Cheapest Premium Means Best Value.”
A rock-bottom monthly premium might look good until you need actual care. That’s when high deductibles, surprise bills, or excluded providers show up.
The right insurance balances cost with coverage, not just the lowest price tag. Cheap up front can turn into expensive regret.
Insurance Myth #15: “Health Insurance Covers All Medical Costs.”
Many people find out too late that their coverage stops short of what they thought it handled. High deductibles, limited networks, and service caps can leave you paying thousands out of pocket.
Always read the fine print and ask directly what’s not included before you sign anything.
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Insurance Myth #16: “Rates Don’t Change Much, I’ll Shop Later.”
Insurance pricing shifts constantly, especially during economic or policy changes. Delaying your review means missing discounts, losing subsidies, or being stuck in outdated plans.
A quick annual review could put real money back in your pocket. Treat insurance like your budget: review it regularly.
Insurance Myth #17: “My Plan Is Fine, No Need to Revisit It.”
Most people don’t think about insurance until life changes, but that’s often too late. Getting married, having kids, switching jobs, or moving all affect what kind of coverage you need.
What worked two years ago might be a bad fit now. Review your policies at least once a year, before life forces you to.
Stop Letting Insurance Myths Drain Your Wallet
Most people don’t question their policies until it’s too late, and that delay costs more than they think. These insurance myths keep premiums high, coverage weak, and budgets exposed.
The fix? Stop guessing and start reviewing. Smart coverage protects more than your stuff, it protects your time, money, and peace of mind.
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