Avoid These 3 Common Life Insurance Mistakes

Avoid These 3 Common Life Insurance Mistakes

Life insurance is a topic most people know very little about. That makes it far too easy to buy a policy that’s not a good fit for your needs. Here are three of the most common mistakes people make when choosing life insurance, and how you can avoid them.

Not seeking discounts
Get a break on your premiums by seeking out any discounts you may be eligible for, such as purchasing more than one type of insurance or taking out a policy for both you and your partner with the same insurer. Healthy lifestyle behaviours may also lead to lower premiums on life insurance.

When considering whether to pay your premiums monthly or annually, annual payments are usually less than monthly payments for some products.

Not knowing policy details and exclusions
Be sure you understand all the details of the policy. For example, if you plan to visit a country considered high-risk or if your job is considered dangerous, some policies may not provide coverage or your premiums may incur an additional cost, to reflect the increased risk.

Many people also fail to disclose crucial information that could compromise their coverage. A pre-existing health condition or an undisclosed driving history with a serious incident, for e could lead to a claim or application being denied.

Not getting right amount or kind
This is by far the most serious and most common mistake. Many people don’t buy enough insurance, either because they underestimate how much would be needed to provide for their family if they weren’t there or because they think it costs more to take out a larger policy.

Some people don’t understand the different types of life insurance and take out the wrong type of policy for their needs or they don’t consider future needs in their decision. This is important because generally speaking, the younger you are when you purchase the policy, the lower the cost. There are many types of variations and coverage options but the most popular life insurance policies boil down into two main types:

Term insurance covers you for a specified number of years. It’s good for short-term needs and is often used as an alternative solution to mortgage insurance offered through the banks. If you need to continue coverage at the end of the term, coverage automatically renews and premiums increase.

Whole life is ideal for permanent needs, such as taxes and final expenses. This product usually offers level premiums and has an investment component and equity in the form of cash values, which you can withdraw or borrow from the policy.

Work with a knowledgeable financial advisor. When you work with an advisor, you’ll get personalized advice that ensures you purchase the policy that provides the right coverage at the right price for you and your family. Your advisor will look at your entire situation, taking into account future needs, and will explain all the options and details of your policy, so that you can rest easy knowing you have the right protection in place.

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