Insurance can be difficult to understand. For many of us, our confusion is exacerbated by the many insurance myths floating around. You might be surprised at what you think is true about insurance that has no basis in fact. Don't be fooled by the following 10 insurance myths.

1. Young and healthy people don't need health insurance: We like to think that health insurance is needed only by the old and sickly. However, health insurance serves as a safety net for unexpected health problems. Even the young and healthy can break a leg or contract pneumonia. Without health insurance, a hospital stay can be financially devastating.

2. Auto insurance will cover business use of my child's vehicle: If your child gets a newspaper route, or uses the car for pizza delivery, you might not be adequately covered by your auto insurance policy. Car insurance generally covers only the personal use of the vehicle. Once the car is used to make money at a job, an accident while performing that business function might not be covered. Double check with your insurance agent to make sure you know your coverage.

3. Everyone needs life insurance: The point of life insurance is to take care of those who rely on your income. If you are not planning to start a family, or if your children are grown up and no longer rely on you, life insurance may not be necessary. However, if you have a spouse that is financially dependent upon you, or you want to a guarantee that your final expenses (such as funeral costs and estate taxes) will be taken care of upon your death, life insurance is worth considering.

4. My employer must provide health insurance: Right now there's no law that requires employers to offer health insurance; yet many do in order to attract and retain quality workers. Not all companies offer employer-sponsored health insurance. Even among those that do, part-time employees may not be eligible. The health care reform law requires businesses with at least 50 or more employees to provide affordable coverage by 2014 to those who work at least 30 hours a week.

5. My auto insurance coverage will pay off my car loan if my ride is totaled: Many drivers assume that their insurance company will pay off the loan or lease if their vehicle is totaled in an accident. However, your insurance company will only pay you the actual cash value of the car (assuming you have collision coverage). This means that if you owe more than your car is worth, you will have to pay the difference unless you purchase gap insurance. This extra coverage pays the difference between the amount your insurer pays for your totaled car and the amount you owe on your lease or loan.

6. Life insurance that builds cash value is better than term life: Insurance that builds cash value can be quite expensive, and the cash value it builds often grows at a very slow rate. Term life may not build cash value, but you can buy more coverage for significantly less money. Some experts recommend that you put the difference between the cost of term life and whole life insurance into some other investment account so that your money grows faster. However, discuss your specific needs with a financial advisor just in case permanent life insurance turns out to be better in your situation.

7. Your employer's group health insurance plan is the cheapest insurance option: Not always. Sometimes a group plan is actually more expensive, especially if you're young and healthy and your co-workers tend to be older, with chronic health conditions. Also, you might be paying for group benefits you don't want (like maternity benefits). If you shop around, you might find that an individual health plan is actually be cheaper. If you have little need of a laundry list of benefits, and are interested mainly in coverage for unexpected health issues, an individual plan could cost less. Be sure to run the numbers to get an accurate look at what is best for your individual situation.

8. Disability insurance is pointless, since Social Security offers disability benefits: Many people are inadequately prepared for a disability that affects their ability to work. Social Security provides disability benefits in some cases, but not for partial disability or short-term disability. Your application for disability benefits could be rejected. Even if it's not rejected, there's the possibility that it takes months to be approved. Consider your income, and determine whether or not disability insurance might be a good idea.

9. Auto insurance covers theft, vandalism, fire damage and hail damage: The law only requires you to carry liability coverage (except in New Hampshire). Liability coverage pays for the damage you do to others including bodily injury, property damage and legal bills if you cause an accident. It does not cover theft, vandalism, fire and hail. If you want protection for those problems, you need to purchase comprehensive coverage which is optional.

10. Long-term care insurance is not necessary because Medicare covers nursing homes: Many people believe that Medicare will pay for nursing home stays. While some nursing home costs may be covered, there are restrictions (limitations to specific nursing homes) to qualify for Medicare coverage. If you receive Medicare coverage for this, it may be at a nursing home that you don't like. Therefore, it's important to prepare for the future by considering long-term care insurance coverage.