When it comes to investing in home or car insurance, it’s only natural that you’ll want to do the adequate research that’s involved to get the best company and the best quote. Taking out a life insurance policy should be no different. After all, it’s such a major long-term commitment that choosing the right company and policy is something that you must get right the first time, as making mistakes could have detrimental effects on the ones that you’re try to protect by taking out the policy.
As with most things that involve contracts and deliberation, it’s easy to make mistakes when taking out such a policy. We’re about to delve into this a little further by revealing five of the most common mistakes that people make when getting life insurance:
1.Choosing the wrong policy coverage
When it comes to choosing a life insurance policy, a lot of people underestimate the amount that they will need to properly cover themselves and their family. Consulting with a financial advisor is one of the first steps that you should take when deciding on which policy and how much coverage to take out as they will be able to help you calculate the amount of money that will be needed to help look after your dependents.
2.Forgetting to re-evaluate the policy regularly
A lot of people that have an insurance policy would have sat down with a financial planner and evaluated their insurance needs before signing the contract and although this is definitely necessary, it’s not enough. Just have a think about this for a moment – if you purchased a policy 15 or 20 years ago your benefits might be less than what you and your family require today. As a good practice, it’s always a smart idea to sit down every few months or at least yearly and reassess your policy from start to finish.
3.Choosing a policy based on the premiums alone
When it comes to taking out a life insurance policy for the first time don’t pay attention to the price alone. Be sure to look at the company’s strengths and benefits and ask around for reviews and recommendations both online and from people you know regarding the company services. When comparing the insurance policy that a company offers always be sure to compare apples to apples and evaluate similar policies with other companies. Regardless of which company you choose and policy you take out, it’s always important to read the fine print.
4.Taking out a policy at the wrong time
Your age is extremely important, as it will determine a lot of what your policy will cover. One of the biggest mistakes that people make when choosing their coverage is taking out a policy at the wrong time. For example, providers usually up a person’s age so if you are six months away from being 30 years old when taking out a policy, an insurance company will take that information and give you a price as if you were already 30. Again, this is why it is important to shop around and do your research when it comes to getting the best quote and policy for you.
5.Relying on third party policies
While it’s common nowadays for companies to take out insurance policies for their staff, it’s always best to have your own independent insurance policy. A lot of third parties insurance, which you are covered for from your employer or workplace, doesn’t often include the full amount of coverage that you would expect it to. A lot of these policies also leave you locked in meaning that you’ll be unable to re-evaluate and alter them at a later date. Some policies are also known to expire in the event that you leave that company.
Investing in life insurance and finding a suitable policy is not something that should be rushed, and make sure that you do not fall victim to the five mistakes that are outlined above.