Common Life Insurance Mistakes

If you have dependents, it’s advisable to purchase life insurance so they will be taken care of in the event of your death. However, there are some things you want to watch out for to make sure that your life insurance policy actually provides the protection you’re looking for. Avoid making the following mistakes:

  • Only counting on coverage you get through your employer. Usually, an employer-provided life insurance policy is one to two times your yearly salary. However, if you have a family, that’s not going to go far, as NerdWallet advises. That’s why it’s best to buy your own policy and view any insurance you get through your work as a bonus.
  • Waiting too long to buy insurance. The longer you wait, the longer your dependents are at risk. In addition, policies get more expensive as you age, because your chances of health problems increase.
  • Not buying sufficient life insurance. It’s critical to buy enough coverage to replace your income for the number of years that your dependents will need to be supported. Usually, that’s between 10 to 18 years or until your children are able to earn their own living. If you’re supporting someone who suffers from long-term disability, you might even need to purchase more coverage.
  • Purchasing too much insurance. At the same time, you don’t want to purchase more coverage than your dependents need, as you’ll be paying unnecessarily high premiums. 
  • Not seeing life insurance as an investment. According to Investopedia, if you have a variable life insurance policy, you need to treat it as an investment because it offers a cash value you can use as a supplemental retirement income. Because the premiums you pay go into investment funds, you need to periodically review them so you stay on top of the cash value of your policy.
  • Choosing the wrong policy. SmartAsset reports that not only can you choose between term and permanent life insurance — there are also different types of permanent life insurance. That’s why you need to discuss what type of policy best meets your needs with an expert, like the independent life insurance brokers at Liberty Financial Group. We can assess your situation and explain clearly what your options are and why you’re best advised to choose one type of policy over another. Contact us for more information
  • Buying too many riders. Riders can be helpful to add additional coverage — but they’re not always necessary. Always take the time to evaluate whether or not you need the extra coverage before agreeing to add any rider to your policy. 
  • Being late with payments. If you’re late with payments or even miss one, it can have an impact on your policy — even to the point that insurance guarantees might be affected. Read the fine print regarding late and missed payments — and better yet, always make your payments on time. 

A life insurance policy is worth a lot of money — and a lot of protection for your loved ones. That’s why you need to review it regularly to make sure it still meets your needs. And if you need to make any adjustments, speak with an experienced, independent life insurance broker first.

Sources

https://www.nerdwallet.com/blog/insurance/dont-make-these-big-life-insurance-blunders/

https://www.investopedia.com/articles/pf/08/five-insurance-mistakes.asp

https://smartasset.com/life-insurance/5-mistakes-to-avoid-when-buying-life-insurance

http://libertyfingroup.com