Life insurance is not always the easiest to understand, which is why mistakes are common. Of course, the biggest mistake maybe not carrying any life insurance at all. An easy way to waste money on life insurance is to pay for the insurance policy for a few years and then cancel the policy. Then there is the most common mistake of simply not matching your life insurance policy to your needs.
Below is a list of the top 5 life insurance mistakes and how to avoid them.
A quick search online will lead you to many different “life insurance calculators”. Don’t rely on only one; instead, try a few different ones that ask different questions. In the end, people’s life insurance needs generally come down to income replacement or enough to replace your debts.
The main purpose of life insurance is to replace the lost income when a loved one dies. Many people take this too literally and don’t realize all of the cost savings that a non-working spouse brings. Establish a total for all of the things a stay-at-home parent does, such as running errands, cleaning the house, cooking meals, managing finances and childcare.
The easy fix here is choosing a plan with a level fixed rate that won’t change as you get older.
Many people are not aware of just how many life insurance products exist. Do your homework. Research websites and talk to professionals about your needs. Chances are good there is a plan that will work best for you.
Regardless of what type of policy you choose, it is important to know exactly what all of the conditions are to ensure your loved ones are cared for should you pass away. Do this research before signing applications and anytime you have a major change in your life.