Insurance does feel like an endless menu of “what-ifs” car insurance, home, health, life, disability, renters, travel, pet, gadget, even wedding insurance. It’s easy to wonder: Do I really need all of this? The truth is, you don’t. No one does.
What you do need is to understand which types of insurance protect your biggest financial risks and how to separate fact from fiction when choosing. Too many people skip coverage entirely because they assume it’s unnecessary, or they overspend on the wrong kind of policy. Either way, myths cost money.
Below are 12 of the most common insurance misconceptions that keep people under-protected, over-insured, or simply confused. And then you’ll find a short guide on how to choose the policies that actually matter for you.
Myth 1. “Insurance companies always try to avoid paying claims”
The myth: Every time you file a claim, the insurer is going to find a way to deny it — so it’s not worth trusting your policy.
The Reality: The statement “insurance companies always try to avoid paying claims” is too sweeping, insurers may have financial motivations (as any business does), but they also operate under regulatory frameworks, legal contracts and market pressures. Your financial protection hinges on how well you understand and fulfill your policy’s terms.
While there are documented cases where insurers delay, deny or reduce claims, the full story is more complex. Most policies are honoured when the claim is valid and supported but many rejections or delays come not from a malicious intent, but from contract terms, documentation issues, or exclusions. For example, a recent review found that marketplace health-insurance plans under Affordable Care Act (ACA) in the U.S. denied an average of about 20% of in-network claims in 2023 with some carriers denying as many as 33%.
In another case, analysis from Texas showed that nearly 47% of homeowner-insurance claims were closed without payment in a recent year — up from 35% in 2016 and above the national average of 42%. These figures don’t mean insurers always avoid paying, rather they reflect the frequency of claim closures, many of which may hinge on policy nuances, unmet conditions, or paperwork problems.
Why it Happens (and why the myth persists):
Policies include terms and exclusions. If a claim falls outside those, the insurer may deny or reduce it. For instance, a car accident while driving a vehicle for business when you’re on a personal-policy, or a home loss due to flood when your policy excludes floods.
Delays and investigations: Insurers may ask for extensive documentation, conduct investigations, or slow the process, sometimes resulting in policyholders giving up. This contributes to the impression of “avoidance”.
Contractual obligations: Remember that insurance is a legal contract. If the insured fails to meet duties (example, notifying promptly, maintaining property, paying premiums), the insurer may lawfully decline.
What This Means for You:
Don’t assume all claims will be automatically paid but also don’t assume nothing will be. Your side of the contract matters.
Read your policy. Understand what is covered, what is excluded, what documentation you need, and what your duties are.
If your claim is valid under the policy terms, then yes, insurers should pay, and many do. But because of the conditions and complexity, this myth persists among frustrated policyholders.
Where to Draw the Line
Sometimes, delays in insurance claims happen for legitimate reasons like paperwork, investigations, or missing information. But other times, those delays aren’t accidental. They can be strategic moves that work in the insurer’s favor, not yours.
If you find your claim dragging on for no clear reason, don’t just sit back and wait it out. Keep detailed notes of every call, email, and update. If things still don’t move, it might be time to talk to a lawyer who understands insurance claims. A good attorney can help you cut through the red tape, call out any bad-faith behavior, and, if it comes to it, take legal steps to make sure the insurer pays what you’re rightfully owed.
Myth 2. “Life insurance is only for older people”
The myth: If you’re young and healthy, you don’t need life insurance — you’ll get to it later.
The reality: Buying life insurance when you’re younger and healthier often means lower premiums. According to Liberty Mutual, younger people lock in coverage at better rates, and it’s not just for parents or retirees. It’s also about covering debts, funeral costs, and future obligations.
What to think about: If anyone depends on your income, or if you have debts someone else might inherit, life insurance is worth considering early.
Myth 3. “I don’t need life insurance because I’m single / have no dependents”
The myth: If no one depends on my income, I can skip it.
The reality: Even single people have liabilities — like co-signed loans, credit card debt, or final expenses. Harvard Western Insurance notes that singles still benefit from basic coverage that prevents financial strain on relatives.
What to think about: Start small. A simple term policy can handle final costs or settle debts without burdening others.
Myth 4. “My employer-provided life insurance is enough”
The myth: I’ve got coverage through work — I’m all set.
The reality: Employer policies often only pay one or two times your annual salary, and coverage usually disappears when you leave the job. South Carolina DOI reminds workers to review how portable their policy is.
What to think about: If you have long-term dependents or debt, consider supplementing with a personal plan that moves with you.
Myth 5 . “Homeowners insurance covers everything that could go wrong”
The myth: My home insurance means I’m covered for all disasters.
The reality: It covers many perils but not everything. Standard policies exclude floods, earthquakes, and gradual damage. Harvard Western emphasizes that knowing your exclusions is key.
What to think about: Review your policy and add riders for risks specific to your region — flood, storm, or fire-prone areas especially.
Myth 6. “Renters insurance is too expensive / I’m covered by my landlord’s insurance”
The myth: The landlord’s policy covers my stuff.
The reality: It doesn’t. It covers their building, not your belongings, they also typically don’t account for future needs, debts, mortgage, or inflation. Horace Mann Insurance explains renters policies are affordable and also cover personal liability.
What to think about: Consider buying a personal policy that you own. That way you control it, you can keep it even if you change jobs, and you can tailor the coverage. Even if you don’t own much, replacing electronics, clothes, or furniture adds up fast. Renters insurance often costs less than streaming subscriptions.
Myth 7. “My car insurance covers everything related to my vehicle”
The myth: Auto insurance automatically protects everything.
The reality: Coverage depends on your plan. Comprehensive and collision are optional in many places, and personal belongings in the car often aren’t covered.
What to think about: Know your limits and your deductibles. If you drive rental cars or live somewhere with high accident rates, consider additional protection.
Myth 8. “The cheapest premium means the best deal”
The myth: The lower the price, the smarter the purchase.
The reality: Cheap premiums can hide high deductibles and minimal coverage. Visions Federal Credit Union warns that focusing only on cost often leaves people underinsured.
What to think about: Compare not just the price, but what’s actually covered — and how fast claims are paid.
Myth 9. “If I never make a claim, my premiums won’t go up”
The myth: Staying claim-free means flat rates forever.
The reality: Rates can rise due to inflation, neighborhood risk trends, or insurer-wide adjustments.
What to think about: Shop around periodically, even if you haven’t filed claims, to make sure your rates remain competitive.
Myth 10. “My savings can handle an emergency, I don’t need insurance”
The myth: A solid emergency fund replaces insurance.
The reality: Savings are important, but a major health event, flood, or house fire can wipe out years of progress. Liberty Mutual notes that insurance is designed to protect against losses too big for most savings to absorb.
What to think about: Use both — savings for small bumps, insurance for disasters that could derail your finances.
Myth 11. “Filing a claim will always skyrocket my premiums”
The myth: Filing means automatic rate hikes.
The reality: Not always. It depends on the type of claim, frequency, and fault. Visions FCU points out that small, legitimate claims often have little impact.
What to think about: Know your deductible threshold — pay out-of-pocket for tiny issues, but don’t avoid legitimate claims out of fear.
Myth12. “Insurance is too expensive, I can’t afford it.”
Many believe coverage is prohibitively expensive. But in many cases, it isn’t. According to the Zebra, a $1 million, 20-year term life policy for a healthy 30-year-old might run around $50–$60/month.
The reality:
Overestimating the cost keeps some people uninsured when they could afford much of the protection they need.
What to think about:
Consider request quotes, compare term vs permanent, and tailor coverage amount to your realistic risk. Often a smaller policy is sufficient and affordable. Don’t assume high cost without checking.
You Don’t Need Every Policy, Just the Right Ones
Understanding these myths doesn’t mean rushing out to buy every policy you’ve ever heard of. It means being strategic. Insurance has always been about coverage that fits your actual risk.
Here’s a way to think about it realistically.
- Start with the essentials.
Everyone should prioritizehealth insurance first, medical bills are the leading cause of debt worldwide. Next, if you drive, auto insurance is non-negotiable (and often legally required). If you rent or own, protect your space with property or renters insurance. - Add life insurance when someone depends on your income.
If you have dependents, debt, or a partner relying on your paycheck, life insurance protects them. But if you’re single and debt-free, you can wait or opt for a basic term plan. - Consider disability or income protection if you rely heavily on your salary.
This is the “forgotten” insurance. It replaces a portion of your income if you can’t work due to illness or injury, something even high earners often overlook. - Ignore the rest until your financial base is solid.
Pet, travel, gadget, or identity theft insurance might make sense later, but they’re not urgent. Build savings first, then expand coverage once you’re stable. - Reassess regularly.
Life changes — jobs, homes, marriage, kids. The best policy today may not be enough (or may be unnecessary) in five years.
We believe the information in this material is reliable, but we cannot guarantee its accuracy or completeness. The opinions, estimates, and strategies shared reflect the author’s judgment based on current market conditions and may change without notice.
The views and strategies shared in this material represent the author’s personal judgment and may differ from those of other contributors at IntriguePages. This content does not constitute official IntriguePages research and should not be interpreted as such. Before making any financial decisions, carefully consider your personal goals and circumstances. For personalized guidance, please consult a qualified financial advisor.
