In making big purchases and big life decisions, it is easy to do the wrong thing when you’re choosing what may be best for you and your family. Life insurance is no exception. Today, we will go over several of the more common mistakes that should be avoided when purchasing a life insurance policy.
If you need life insurance, then you don't want to put off getting it any longer than necessary. As you get older, the premium rates will increase. You are also at greater risk of developing health complications and conditions that may make finding an affordable policy harder to do.
Fail To Compare
Another common mistake when purchasing life insurance is failing to do enough research and compare rates from different companies. The price for a 15-year policy through one company, for example, may be higher than the price for the same policy offered by another company. Insurance agents can work with you to help you find the best rate for the policy that fits your needs.
Fail To Consider Health Conditions And Lifestyles
When purchasing an insurance policy, you need to understand that your lifestyle and health factors can have a significant impact on how much you will pay in premiums. For instance, if you are a smoker or are diabetic, then your monthly premiums may be higher. Inform your insurance agent of any impaired risk, which means you have to tell them about anything that may affect the price of your policy.
Choosing The Wrong Policy
Different types of insurance policies exist so you can tailor your plan to your specific needs. However, you need to make sure you are going for the right one so you will have the exact coverage you need.
A term life insurance policy is more straightforward than others and pays out benefits if you pass away within a certain time frame, no matter your cause of death. Meanwhile, permanent life insurance benefits include cash value to supplement a retirement plan and can help pay for medical, nursing, or terminal illness expenses.
The Wrong Coverage
Just as important as the policy itself is making sure you have proper coverage options in place. To determine how much coverage you need, calculate your long-term and outstanding debts before deducting your life insurance coverage and liquid means.
Naming The Wrong Beneficiary
When purchasing your life insurance policy, you will be designating a beneficiary. If you choose a minor and you pass away before that minor turns eighteen, then the life insurance company can't give them the benefits until a guardian is appointed. This can cost time and money because an attorney is needed and court fees have to be settled. You need to choose a beneficiary carefully, preferably an adult. You can also set up a trust fund for minor children directing them on how the funds can be spent.
Are you guilty of making any of these 6 common mistakes when it comes to looking for and purchasing a life insurance policy? If so, don't make the same mistakes again. Contact our insurance experts by visiting us so we can help you find the best rates and policies for your needs.