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7 Mistakes to Avoid When Buying Life Insurance

7 Mistakes to Avoid When Buying Life Insurance Photo

©Depositphotos/lucianmilasan

Life insurance sounds boring to some people. They tend to ignore the fact that they need it. Some purchases life insurance but cancels it in the middle of the process believing that they would save more money. Some will just make a deal without even knowing that they are already creating mistakes which will cause problems in the future.

Here are some of the mistakes to avoid when shopping for life insurance:

1. Not knowing about the basics

In many things that you are planning to do, knowing the basics should be the very first step to take. Wean on taking another step if you don’t know what you are doing. This will save you from failing to get a good deal.

Since buying a good life insurance is not an easy task, you need to be keen when it comes to selecting one. Quickly learn the basics by researching and reading some articles. Now that we have internet, information is now abundant so make use of it.

2. Not buying the right amount of coverage

Some people are not making serious calculations when it comes to coverage. This is the amount of insurance that’s necessary to secure your family. You need to know the amount of money that your survivors will need and for how long. This will determine the amount of coverage that suits your family.

Since this could be a challenging task, you can ask help from your adviser for some calculations.

3. Wrong timing on policy switching

Cancelling a policy before you get the new one could be risky. This can also be considered as wrong timing as you are taking the risk of having no insurance within a period of time. Never let a second go with no protection from these life insurance policies. It’s life; you never know what’s going to happen next.

4.  Thinking that it’s too expensive

A lot of people think that getting a life insurance will be too expensive for them.  What they don’t know is that there are policies that suits different levels of needs and budget.

Consider term life insurance.  This provides insurance over a specific time method and is more affordable than permanent insurance.

5. Naming the estate as beneficiary

Doing this will make the tax people and other people be the recipients of your life insurance. For sure you don’t want this to happen. Always make sure that you place a name on your beneficiary. If not, then the proceeds will be automatically paid to the estate.

It is advisable that you should add two back up beneficiaries. In case that you and the other one die, someone can still claim the coverage.  Use the rule of two for all your documents and contracts. Such as will, profit sharing plan and back up guardians for your children.

6. Ignoring your additional income

Some people forget about the benefits of their job such as retirement account payments and health insurance. When adding up your total income that you would need to replace, these benefits should also be included in your calculation. If you do this, your life insurance would pay more money to your beneficiaries.

7. Not asking questions

You could be a top sales agent or an engineer but there are many more things in life that you don’t know for sure. If you have doubts or questions about a certain policy then you should ask. You can also consult experts regarding this. Doing so would make you feel a lot comfortable with your life insurance that you just purchased.