Buying a life insurance policy is one of the most important financial decisions you can make to insure that your family will be well taken care of when youâ€™re gone.
According to LIMRA, 85%Â of consumers agree that most people need life insurance, yet justÂ 65%Â say they have it. (Source: LIMRAâ€™s Life Insurance Barometer Study 2013)
“Those who do have life insurance often donâ€™t understand how much to buy and what a reasonable price is for a policy”.Â In fact, a recent LIMRA survey revealed that 70 percentÂ of Americans failed a recent 10-question basic life insurance IQ test.
Figuring out more about life insurance policies can be overwhelming and confusing, so weâ€™ve made a list of some of the most common mistakes people make so you can be sure to be better prepared:
- Donâ€™t put misinformation on your application. It can be tempting to provide misleading personal information on your application to try and receive a better premium, but that could end up putting your familyâ€™s security at risk. Itâ€™s important to be completely honest because false information can be the basis for a life insurance company to deny a claim.
- Donâ€™t wait until you are older to buy a policy. The younger you are and the better health you are in, the more affordable premium you are more likely to obtain. As you age, insurance rates will only go up.
- Make sure you purchase the right amount of insurance. Not purchasing enough could mean that your family wonâ€™t be adequately covered in your absence.Â Donâ€™t estimate how much you need because you could end up spending too much or not enough.Â Take the time to really sort out your family expenses according to your dependents ages and other obligations your family has. Consider your debts as well, because you want coverage that can cover them, and provide your family with a home and income.
- Make sure you properly designate a beneficiary.Â Mistakes in this area are subtle, but can have potentially significant ramifications. Be sure to coordinate between beneficiary designations, and wills and trusts. Of course we always advise you to consult with your attorney to be sure your affairs are handled in a professional manner.
- Keep your insurance plan up to date. Changing jobs, moving homes, having children, marriage, divorce, etc. are all factors that should be taken into account when deciding what the best policy is for you. As well, make sure you adjust your policy when family changes occur. Â This may save you money and insure you are adequately covered.Â
Here at SelectQuote we are dedicated to making sure that finding the right insurance policy for you and your family is as easy as possible. By following the guidelines here, you can rest assured that you are on the right path to peace of mind and knowing that your family is protected.