Mistakes when Buying Life Insurance that is Amazingly Simple to Avoid
Refrain from These 5 Mistakes When Buying Life Insurance
Finding the appropriate life insurance is a critical choice that you make for your family. As soon as loved ones in your family start looking up to you, it’s time to evaluate insurance options that can save them from any impending financial troubles.However, you don’t want to slip up while buying life insurance. There are mistakes when purchasing life insurance that is amazingly simple to avoid.
Due to a plethora of choices and customized policies that currently exist in the market, finding the appropriate life insurance may seem like a daunting task. A competent life insurance advisor will put you on the right track regarding life insurance advice.
There are a few necessary precautions that you can take on your own as well. Let us look at some common life insurance mistakes to avoid that many potential customers fall prey to while buying their own policy.
1. Unclear of the Objective of the Policy
Any life insurance policy that you buy should serve a purpose. There is a tendency today to purchase life insurance for investment purposes to save income tax. This is one of the biggest life insurance mistakes to avoid. You may well end up with a life insurance policy that is not suitable to cover your family’s needs when you have passed on.
There is a variety of different life insurance products in the market being offered by various companies. With the help of a competent life insurance agent, you can choose a suitable policy that defines a clear objective, so that you aren’t saddled with a plan that doesn’t benefit your family after you are no longer there to provide for them.
2. Waiting for The Right Time
Most uninsured individuals procrastinate buying life insurance until they are older. This is usually done by people who perceive themselves to be reasonably healthy and life insurance to be rather expensive. The best life insurance advice is not to commit this error. This horrible mistake could jeopardize the lives of your family and friends for years on end.
Buying life insurance at a young age will make you realize how affordable it is. It is a misconception that life insurance is too expensive. All you need to look for is cheap term life insurance.
It is a foolish idea to wait until retirement for buying life cover because you will then no longer qualify for universal life insurance or whole life insurance. Also, if you start looking for protection at the right age, you can actually spend more time looking for the right life cover for yourself.
3. Lying While Filling Out the Application
Many of us tend to lie while filling out the life insurance application form. Your income, current health situation, your lifestyle and many other factors collectively determine the overall coverage as well as the monthly, quarterly or yearly premiums. While lying about your actual situation may seem like a money-saving hack, it will usually result in a rejected application.
This tendency is particularly prevalent among smokers who try to pass off as non-smokers in the application since they do realize that life insurance for them will be much more expensive than for non-smokers.
However, the truth of this claim can be verified by a mandatory blood and urine test that will expose any nicotine in the blood. This discovery will not just make the process longer but will also endanger your credibility in the eyes of the insurance company. Hence, good life insurance advice is for you to be entirely honest with your insurance company.
4. Investing Insufficient Money in Life Insurance
Although there are some thumb rule methods that people use to calculate the right amount for their insurance, you need to understand that no two situations are alike and hence generalizationmay not be a good idea. You can get the best life insurance advice from a competent life insurance advisor. Always going with a small policy and remaining hopeful of good things to happen may not be the best idea. Considerations like current income, debt liabilities, ages of dependents are also very critical to this calculation. Useful life insurance advice could be as quoted by one person who bought life insurance as follows:
“When I wanted to decide how much term life insurance is required for my family, I considered my wife and 3 kids because I didn’t want them to suffer if something unfortunate were to happen to me. I wanted to ensure that my wife did not ever have to go to work. This made me take out a $2.5 million30-year term insurance policy.”
Now, this might seem exorbitant to you, but it was just right for that person. The peace of mind this insured person derived from the assurance that their family’s financial future would be secure if something tragic were to happen to them, was priceless.
5. Ignoring the Claim Settlement Ratio
Policy features, benefits, financial strength and ratings of the company are common factors that you all check while narrowing down your options for buying the right life insurance. But what you often forget to check is the claim settlement ratio or loss ratio as it is also called. This ratio is basically a measure of the number of death claims settled by the insurer. For example, if the insurance provider received a total of 100 death claims and had resolved 94 of them, then the claim settlement ratio is 94%.
This ratio is a handy yardstick to measure the insurer’s reliability. It allows you to ascertain whether or not the insurance provider pays the beneficiaries the death benefit amount. Failure to settle claims defeats the fundamental purpose of investing in a life insurance policy. Moreover, a higher claim settlement ratio implies a higher chance of your future claim being paid by the insurer.
Our Final Word
We understand that you don’t like talking about life insurance because you don’t like thinking aboutyour own death. But open conversations about planning for an unexpected death can be surprisingly life-giving. And even if you don’t buy insurance, the chances are pretty high that purchasing life insurance is still an essential part of your long-term financial plan.
Not purchasing any life insurance could be the most preposterous decision you ever take for your family. Regardless of how much you earn, nobody knows what the future holds for us. Loss of a loved one can be immensely shattering. A family can be emotionally and financially safeguarded during these testing times with a reliable and affordable term life insurance policy.
Having a life insurance agent come to your house to offer you life insurance is a thing of the past. From the fact that you are reading this article, chances are that you already have a PC and an internet connection. Well, that’s all you need to find term life insurance quotes for yourself online.Let’s not commit mistakes when buying life insurance that is amazingly simple to avoid. Let us take charge of our lives. Now!
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