There are many choices to make when it comes to buying life insurance, and with so many options, it’s easy to end up with a policy that doesn’t fully meet your needs. From procrastinating to choosing the wrong type of coverage, here are the top mistakes you’ll want to avoid when buying life insurance.
Life Insurance Mistake #1: Relying Solely on Group Life Insurance
While group life insurance (also known as employer-provided life insurance) is often easy to qualify for, it doesn’t always provide the amount of coverage and options you need. The policy will only cover you for as long as you work for your company. Relying solely on a group life insurance policy might cause you to put off buying your own life insurance policy, which can result in more expensive coverage down the road.
Life Insurance Mistake #2: Procrastinating to Buy Life Insurance
Purchasing life insurance while you are young and healthy is the most affordable way to buy life insurance. Older individuals can expect to pay higher premiums for both term life insurance and permanent life insurance. It’s a wise decision to lock in what you think you’ll need to cover not only current, but also future expenses. Future expenses might include a mortgage, a significant other, children, or student loans if you decide to go back to school.
Life Insurance Mistake #3: Choosing the Wrong Type of Life Insurance
When choosing the type of life insurance you need, you’ll be deciding between term life insurance and permanent life insurance. You’ll want to assess the benefits of both life insurance types to ensure you make the best decision for you and your loved ones.
One of the biggest differences between the two can be life insurance cost. Term life insurance is the most affordable option, providing substantial coverage at often a low monthly (or annual) life insurance rate. Permanent life insurance is, therefore, the more expensive option, but has the perk of lasting your lifetime, so long as the premiums are paid.
Term Life Insurance
Term life insurance gets its name from your option to choose the “term” or length, allowing you to only buy it for as long as you need it. It doesn’t build up a cash value like permanent life insurance, making it the most affordable way to protect your family’s financial security.
Permanent Life Insurance
Permanent life insurance represents a category of several types of life insurance without a pre-set expiration date, including whole life insurance and universal life insurance. As the name implies, it’s designed to last for your entire life and the coverage does not expire as long as the premiums are paid.
Life Insurance Mistake #4: Forgetting About Your Future Financial Responsibilities
Life changes frequently, which is why it’s important to consider not only your current financial responsibilities but also your future ones when buying life insurance. If you’ve landed on a term life insurance policy, try to think ahead about any potential changes that could occur. Future financial responsibilities might include getting married, growing a family, or starting a new job. As your life changes, it’s important that your life insurance policy continues to reflect your needs.
Life Insurance Mistake #5: Not Purchasing Enough Coverage for Your Life Insurance Beneficiaries
Since life insurance replaces lost income, the proceeds from your policy should be enough to cover immediate expenses as well as provide continuous income for your life insurance beneficiaries. Without adequate life insurance coverage, your beneficiaries will be responsible for providing an income to pay for basic living expenses and more. Most people have no idea how much life insurance they need, but our life insurance calculator can get you started on determining the right amount of coverage for you and your life insurance beneficiaries.
Life Insurance Mistake #6: Not Shopping Life Insurance Policies through SelectQuote
Life insurance policies, including life insurance rates and coverage, vary by life insurance company. Understanding your options can seem challenging, but at SelectQuote, we can shop life insurance policies to find the right coverage for you. We can compare life insurance policies, life insurance rate information, and life insurance coverage options from some of the most trusted life insurance companies in just minutes. Our goal at SelectQuote is to help you find the right coverage with the right carrier at the right price for you. Let us help you by shopping life insurance policies with us today.