Life insurance is designed to provide a measure of financial security to loved ones after you’re gone; the money can help pay off debt, fund a spouse’s retirement or help children pay for their education.
When shopping for a policy, watch out for and avoid these major missteps.
1. Choosing the Wrong Kind
When deciding between permanent and term life insurance, you’ll need to assess what you really desire from the policy. If something happens to your spouse and you only need enough funds to cover mortgage or credit card payments, a term policy could make the most sense. But maybe you’re looking for a policy that will allow you to earn some returns on your investment. If you can pay a little more, look into a permanent policy.
2. Underestimating Your Needs
In addition to choosing a policy type, you have to decide how much of a death benefit you need. It’s best not to pick a number out of thin air. If you don’t do your homework, you run the risk of selling your beneficiaries short in the long run.
3. Not Comparing Rates
Like with any other type of insurance, shop around to make sure you’re getting the best rate. Signing up for a life insurance policy without comparing rates for a few different companies could end up costing you money.
4. Focusing on Price
The cost of buying life insurance may be enough to scare people away. You could also be tempted to reduce your coverage amount in order to score a lower premium. Still, life insurance is not something you can afford to skimp on.
5. Waiting Too Long To Buy
The sooner you buy life insurance, the better. Premiums will only increase as you get older. Also – take the time to review your policy regularly to make sure it still fits your needs. Knowing that you have the coverage you need can provide peace of mind for you and those you love.
For more information, please read:
5 Mistakes to Avoid When Buying Life Insurance | Smart Asset