According to a Bankrate Money Pulse survey from June 2015, nearly 50 percent of American households donâ€™t have any life insurance to speak of. Among those who do have it, nearly half are underinsured. The survey also notes that many policyholders donâ€™t understand how much life insurance they need or how much they should be paying, which can lead to serious mistakes during the buying process. Here are seven of the most common life insurance mistakes to avoid before, during and after you buy a life insurance policy. Being Less Than Honest on Your Application It can be tempting to provide misleading personal information on your application to try and receive a better premium. However, doing so could put your familyâ€™s financial security at risk. Itâ€™s important to be completely honest in your application because false information can lead to inaccurate quotes and, even worse, grounds for a life insurance…
Letâ€™s face it â€“ most people donâ€™t like to spend more time than necessary thinking about life insurance, so when you filled out your application, you probably listed your spouse or closest relative as beneficiary, signed the forms, and hurried to the office or beach. But while your spouse or closest relatives are logical choices for beneficiaries, they might not be the only people affected if something happens to you. By choosing, adding, and changing beneficiaries based on your life circumstances, youâ€™ll have peace of mind knowing that your wishes will be fulfilled after you pass.
If something happened to you today, who would be affected financially? This is the question you need to answer when choosing beneficiaries for your life insurance policy.
When a marriage is legally dissolved or annulled, the rights of your spouse to your will, trust, power of attorney and several other items on your financial checklist will automatically be null and void.
But did you know that divorce does not automatically cancel your exâ€™s rights as beneficiary of your life insurance policy? If you acquired a life insurance policy and named your spouse as the beneficiary, you have to take very particular steps to change that. If you donâ€™t, your ex-spouse could become the recipient of a payout upon your death!
Itâ€™s an easy thing to miss. With all the more pressing legal and financial issues to sort out during a divorce, life insurance policies might get placed on the back burner.