Most people understand the necessity of life insurance these days. However, locating the right policy isn’t as simple as selecting a product off of a shelf. Life insurance is right up there with investment decisions or choosing a home, in terms of importance and complexity. Unfortunately, that means the process is fraught with potential missteps.
As you research different types of life insurance policies, or re-evaluate your old policy, remember to avoid these common mistakes.
Avoid assumptions. Ask a group of people how much a particular life insurance policy costs, and most will overestimate it by about three times the actual cost! Chances are very good that you can afford far more coverage than you imagine.
Don’t rely on your company policy. Many companies provide life insurance for employees, and it’s certainly a valuable benefit. But don’t rely upon it to meet all of your coverage needs. Sometimes these policies are canceled without notice. Or, you might leave your company at some point. It’s best to enroll in your own policy, because you’ll always know the status of it.
Tell the complete truth on your application. Most insurers double check your information with the Medical Information Bureau. If you aren’t truthful about smoking or a pre-existing medical condition, your beneficiaries could be denied a payout if you pass away.
Choose your beneficiary carefully. Many people assume this is an easy decision, but it isn’t. Due to legal or tax regulations, things could become complicated for your beneficiary after your death. Work with a skilled professional to anticipate any potential complications for your heirs.
Resist the urge to “set it and forget it”. Choosing a life insurance policy isn’t something you just do once, and then forget for the rest of your life. Every few years, you should perform a new needs analysis and update your policy as needed. Otherwise, your heirs might not have all of the benefits they truly need when they need them.
Don’t underestimate your coverage needs. Chances are good that you need more insurance than you think, or a different type of policy would suit you better. Meet with us to perform a needs analysis, and we’ll help you match a policy to your specific needs.