Avoid These Mistakes When Buying Life Insurance

Avoid these Mistakes When Buying Life Insurance

Very few choices will be as important to a family and loved ones as finding the proper life insurance. The moment that a child, spouse, or other party is financially dependent, it is time to begin taking a look at the insurance offerings that could save them from financial ruin in the future.

Finding the correct life insurance may seem difficult, however, as there is a seemingly unlimited amount of choices and customized policies that are currently available. Here are a few of the most common mistakes that many customers will find themselves hampered by when shopping for their own policy.

Waiting Until it is Too Late

One of the first responses that uninsured individuals will give about their life insurance options is that they will simply wait until they are older. This answer is especially common for those that feel as if they are relatively healthy or may not be able to afford a policy in their current financial situation. Don’t make this mistake! Unfortunately, this can become a devastating mistake and could harm one’s family or friends for years on end.

Those that act and buy life insurance at a much younger age will realize how inexpensive it is. Most believe that life insurance is too expensive. False. There aren’t many things more expensive than cheap term life insurance.

By waiting until retirement, potential customers may find that they can no longer qualify for universal life insurance or whole life insurance and they cannot afford any term life insurance offerings. For those that seek out a life insurance agent as quickly as possible, more time can be spent finding the perfect policy.

Lying on the Application

Even the most honest of individuals may find themselves tempted when it comes time to fill out the full life insurance application. Everything from one’s income to their current health will determine the overall coverage as well as the monthly, quarterly, or yearly premiums. While it may seem like it could save the applicant money, it will almost always result in a denied application.

This is an especially common problem for smokers as this is one of the most defining questions of the life insurance application. People realize that life insurance for smokers is much more expensive so they try to pass it off that either they don’t smoked or “haven’t touched a cigarette for years”.

Remember: you will have to take a blood and urine test to get your life insurance policy so if you have nicotine in your system they will find it. It only compounds the problem if other health issues arise and now the insurance company is going to find it hard to believe you regarding other matters. Always tell the truth.

Purchase an Adequate Amount

There are a number of simple rules that are used as cookie-cutter method of buying life insurance, but every single situation is unique. Instead of going with a smaller policy and hoping for the best, a few considerations should be made beginning with one’s annual income and the amount of debt that the family is currently under. The practical costs of the funeral and potentially even the medical expenses will also factor into how much coverage is needed.

When determining about the amount of coverage that will be required for the family, the ages of any dependents are other important factors. When deciding how much term life insurance I needed to buy for my family, I took into consideration my wife and are 3 kids. I didn’t want her to have worry about monthly expenses, college tuition, or ever have to go to work. That was very important to me. Because of that I took out a $2.5 million 30 year term insurance policy.

Does that seem excessive? For many, it might. For my family and I it was a no brainer. The added expense doesn’t compare to the peace of mind knowing that my family will be taken care of if something unfortunate were to happen to me. How much is peace of mind worth to you?

Conclusion

There’s no excuse to not shop for life insurance. Gone are the days of having your life insurance agent come to your home and sell you life insurance at your kitchen table. As long as you have computer and an Internet connection, you can find term life insurance quotes online in a matter of minutes. Yes, it’s that simple.

In the end, the biggest mistake that one could make is not purchasing any life insurance whatsoever. Funeral expenses, mortgage, medical bills, tuition, and daily expenses could become an unmanageable burden on a family after the death of a loved one.With a robust and affordable term life insurance policy, a family can be financially protected during these trying events.

Jeff Rose is a certified financial planner and an Iraqi combat veteran. He runs the blogs GoodFinancialCents.com and LifeInsurancebyJeff.com.