We are all guilty of making mistakes in life from time to time – hey, we’re only human, right? When it comes to life insurance policies, mistakes are a lot more frequent than you would think. After all, all it takes is a slight miscommunication or misunderstanding when completing a form. Those applying for life insurance for the first time should always have an insurance advisor read over their policy before they sign, to ensure that all details are correct and that they have correctly understood each area of the form.
Mistakes can be made both directly and indirectly, and these mistakes can end up making your life insurance policy null and void, with your family left without a pretty penny. For this very reason, it is important to ensure that you do not commit any critical mistakes.
The following are the top 5 life insurance mistakes to avoid:
Choosing the Wrong Type of Policy
Choosing the right life insurance policy to begin with is ever so important. If you are set to retire in the next few years and will be living on a depleted income, you’ll need to ensure that your life insurance policy rates aren’t reviewable. The last thing you want is for your income to deplete and your life insurance premium to increase. Unless you compare your goals to the terms of the life insurance, it is likely that you will end up picking the wrong policy. For example, you may only really want to be covered for the 15 years remaining on your mortgage, but not do your research correctly and up with whole life insurance!
Not Shopping Around
One of the key mistakes that people make when purchasing a life insurance policy is that they do not shop around. They are merely impressed by the salesman who calls them or knocks on the front door and before they know it, the document is signed on the dotted line! Like any form of insurance, life insurance is a very competitive market so it can really pay both in the short and long term to shop around, not only for the best price, but the best conditions too.
Allowing Price to be the Primary Deciding Factor
While it pays to shop around, the price of the insurance policy should not be the primary deciding factor. Why could this lead to a huge mistake? Well, while you may be swayed by a low premium, you may commit to that same policy to realise that some key conditions that you require are not included and your life insurance policy could very well end up being a huge waste of money.
Not Enlisting a Financial Advisor
Unless you have an insurance background, it is very difficult to wholly compare your life insurance options and decipher the best policy for you. Enlisting the help of a financial advisor can ensure that you don’t sign a policy based on false assumptions, as they will explain every single step for you in layman’s terms. After all, it is their job to find the best policy for you!
Not Reviewing a Policy
Once you’ve signed on the dotted line, the biggest mistake to avoid is to not regularly review your life insurance. Premiums can go up and down and personal circumstances can change so while a policy or premium may have best suited you 12 months ago, it may not be the case today. Review your premium and policy at least every 12 months to ensure you are getting the best deal around.
We hope this guide serves you well in ensuring you get the best life insurance premium and conditions for both you and your family!