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Most common mistakes people make with Life Insurance

In the previous blog I discussed the importance of life insurance and why you need it.  Now I would like to point out some common mistakes and misconceptions. 

Here are the most common:

  • Not purchasing while you are young and still healthy.
  • People tend to think they are too young for life insurance. Remember, some determining factors on premium are age and health.

 

  • Not updating policies or paying attention to term conditions.
  • You may need to update beneficiaries due to; marriage, death of beneficiary, divorce, or children getting married.
  • Term policies expire. You need to pay attention to when this will happen to avoid being without life insurance. Term policies can be converted to a permanent policy.

 

  • Taking out loans against the policy and not paying them back.
  • Not paying back the loan will decrease the death benefit, or possibly accelerate a lapse.
  • Also, if the yearly interest amount isn’t paid, this amount will be added to the loan balance.

 

  • Thinking that life insurance through work is all you need.
  • In most cases, you cannot take this policy with you when you leave the job or retire.
  • Most people do not know how much life insurance coverage they have at work; the amount may not be enough should something happen to you.

 

  • Not purchasing enough life insurance for their needs.
  • Your needs should be evaluated.
  • You and your significate other should discuss and create a plan that involves the present and future needs.
  • Things you need to consider; estate planning, long term care, final expenses, beneficiary’s needs, and amount of debt to name a few.

 

Consulting with your advisor could help eliminate some of these mistakes and misconceptions.

 

– Nancy Zimbardi –