There are many things to consider when purchasing life insurance. You need to consider what your goals are for buying the policy, which type of policy will fit your lifestyle and budget, how much coverage you want, and how much you are willing to pay.
All of these factors will have an impact on the type of policy you choose. There are many mistakes people make when they are purchasing their life insurance. Here are a few of the most common mistakes people make when buying life insurance policies so you can avoid these pitfalls.
Many people procrastinate when it comes to buying life insurance and they end up paying for but later – literally. The simple fact is that the younger you are, the less expensive the policy.
Many people who are young and healthy do not consider life insurance to be a necessity, but as we all know, life can be pretty unpredictable.
Not to mention, it will also be much more expensive and much harder to get life insurance when you are older or have developed health issues. If you have not bought a life insurance policy yet, buy one now. It will be the lowest price you will pay.
Many people start shopping and buying life insurance before ever checking with what their employers offer. Many employers now offer several life insurance options. Life insurance through your employer can be at a fraction of the cost you would normally pay as an individual.
This is because many companies get a bulk rate when it comes to the insurance they offer. Buying insurance through your work can be a great way stretch your insurance dollars.
Many people make the mistake of naming their estate as the beneficiary instead of an individual. If you name your estate as the beneficiary, it can be tied up on court for months or even years.
It also means that the insurance payout will be hit with higher inheritance taxes and higher tax rates than if an individual beneficiary is named.
Have a beneficiary and a back up beneficiary. The reason for the back up is in the event your first named beneficiary dies before you do, the money will not be tied up in probate court.
Not Enough Coverage
Many people make the mistake of not getting enough coverage for what they need. You need to take into consideration how many dependents you have and how many beneficiaries you will have named. You want enough to cover your final costs and any remaining debt you may have.
Do you have a mortgage that needs to be paid off? You also need a large enough benefit to ensure your loved ones will have enough income to survive without your salary.
If you want to leave enough money for retirement or for a college education you will need more coverage as well. All of these questions are good things to ask yourself when buying a policy.