A. The types and selections of life insurance products could be confusing. Below are 7 common mistakes people tend to make when purchasing life insurance -
1. Looking only at price
Whether buying temporary (term) or permanent insurance, consider the company’s financial strength and the policy’s guaranteed features. If you’re buying a term policy, compare the death benefit, the cost of the policy and the insurer’s rating to competitors. Such “apples to apples” evaluation can help you get the most insurance for the longest term at the best rate from a strong company. If you need permanent insurance instead of (or in addition to) term, also compare the assumed interest rate that each policy is offering. Decide which of all these variables is most important to you, make sure the others are equal, and then solve for the variable you’re emphasizing.
2. Automatically buying term life only
With longer life expectancies, today’s 30-year term policies are cheaper and more cost-effective than ever, and usually best if you don’t need life-long coverage. But some people have more than one need for insurance: for example, to ensure that a surviving spouse won’t lose the home while protecting the children from estate taxes. For such reasons, you may need a permanent policy, or even two policies — term and permanent.
3. Not buying enough coverage
Consumers often underestimate the amount of insurance that’s needed to properly protect their families. How much money your survivors will need and how long they’ll need it are key factors in determining the amount of coverage that’s right for your family.
We will discuss the other 4 common mistakes in next blogpost.