5 Mistakes to Avoid When Buying a Life Insurance Policy
Everybody makes mistakes. Under normal circumstances, we can correct our errors and learn from them. When it comes to life insurance, however, it may become too late to fix a critical mistake. And unfortunately, the result will impact the reason you purchased life insurance in the first place – your loved ones.
We’ve put together a quick checklist of mistakes you must avoid making sure the ones you leave behind are protected as you intended.
#1 Not buying enough – How much coverage is needed varies by individual. Using the DIME method, you can develop a starting amount that will fund the necessities: Debt, Income, Mortgage, and Education.
#2 Naming the wrong beneficiary – Do not name minors as your beneficiary as they will be unable to accept the benefits. If you have children, name a trusted individual as their guardian and trustee of any funds, including life insurance proceeds. Additionally, do not name your estate as beneficiary either as it will be left to the courts who will receive the benefits.
#3 Misplacing your policy – Make sure your partner knows you have a life insurance policy and where to locate it if something were to happen to you. Millions of life insurance proceeds go unclaimed every year for no other reason than surviving family had no idea a policy even existed.
#4 Buying the wrong policy – For most families, term insurance can provide the most benefit for the lowest cost. When buying coverage, your first obligation is to insure yourself for the proper amount. Further, make sure you are buying life insurance. It may sound obvious, but policies such as Accidental Death & Dismemberment are sold as cheaper alternatives, but with extreme limitations.
#5 Not buying coverage early – Every household is balancing their bills each month. Life insurance gets easily placed on the back burner. But consider how difficult it would be for your family to balance the family budget if you passed away. Could they still manage? Waiting too long to buy life insurance could make it unaffordable or unavailable if your health changes in a negative way.
Life insurance should serve as the foundation for even the most basic financial plan. Today, life insurance is easy to obtain and affordable enough for any budget. To learn how to protect your family from financial hardship, contact me today.