Five Biggest Mistakes Consumers Make When Buying Life Insurance
You cant go wrong when you ask too many questions
. Unfortunately, when it comes to life insurance in the United States, we find that most people dont ask any questions at all because theres so little consumer knowledge about life insurance. This affects their ability to make a wise, informed decision.Thousands of consumers have paid dearly, both monetarily and emotionally, for lack of life insurance knowledge. You can avoid heartache and stress by following the tips below.
1. Buying too much
Even though some people think that too much life insurance can never be a problem, it is in fact turning out to be one. A new trend in life insurance habits has emerged with the downturn of the economythat of lapsed insurance policies, because the premiums were too costly to pay every year. Have you bought more life insurance coverage than you need, especially if you cannot afford it? Are you paying more than you ought to? If so, then its likely that your life insurance policy will be the first to bear the brunt of cost cutting measures if you ever come to it. And youll be surprised at how badly a family would need the benefit should something happen to their primary breadwinner. People buying life insurance for the first time should never buy the first thing thats recommended to them. Looking around for life insurance quotes online is a good way to compare and see what other carriers may be willing to offer, because life insurance rates vary widely from carrier to carrier. Compare quotes and find out if you can save on premiums every year.
2. Buying too little
Buying a policy that is inadequate to meet your familys life insurance needs is a typical mistake that has plagued consumers for years. Buying too little coverage can mean leaving your family behind and strapped with expenses; expenses that could have been easily taken care of for an additional few dollars a month in insurance. At least 5 times your salary is a recommended amount in overall coverage, but many choose to tweak this amount based on their actual financial status. You should factor in any loans in payment status, the mortgage and other liabilities that can leave your family vulnerable. Use an online life insurance needs calculator to find out how much is good enough. Stay-at-home moms are a group typically and grossly under covered because they underestimate their contribution to the family. If something happened to them, hiring professional help with growing children and housework can prove to be up to 4 times more expensive!
3. Not updating coverage
There are certain (inevitable for some) events that take place in ones life that can drastically change life insurance needs. Events like marriage, co-ownership on a home, births, new jobs and divorce all mean that your life insurance needs should now factor in extra people (like a spouse or child) or expenses (like a new home) in calculations.
4. Not buying the right type for your profile
The type of life insurance that lapses the most is whole life insurance. The primary reason why is because whole life is not intended for families in the low to medium income bracket. With its expensive out-of-pocket premiums and high agent commissions, they drain resources that could have been spent on more urgent expenses, or even investments with a higher measure of risk but greater returns. When in doubt, always choose term life insurance because cheap premiums allow more financial flexibility and growth. Another common mistake people make is relying on group life insurance through their employer to cover their needs. While group life is actually a savior when it comes to people with high risk conditions who find it difficult to get affordable life insurance outside of work, group coverage can be lost at any time if you quit, get fired or your employer decides to stop offering any.
5. Not reviewing yearly
Finally, review your policy every year to make sure that all of these mistakes are not being made. It is likely that one year, you may find that your life insurance policy is serving you well, but in another, its not a good investment at all.
If you dont have a policy on yourself and you know that you will leave behind people in considerable financial hardship should something happen to you, this might be the biggest mistake of them all. Look up life insurance quotes online to see for yourself just how affordable the premiums really are, and dont put off purchasing one for too late. Dont buy the first thing you see; compare life insurance quotes from at least ten carriers, and ask to see illustrations if you dont understand how a certain policy works.
For more information on life insurance, types of life insurance, coverage calculation, how to find the best life insurance company and instant term life quotes, visit online aggregator websites that offer affordable life insurance policies recommended on reputed financial portals across the country.
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