We prefer not to think about the negatives in life as we believe they can’t happen to us. But things happen whether we want them to or not – that’s life. Having life insurance provides a peace of mind that everybody deserves. Here are the six most common mistakes that people make when thinking about life insurance:
Mistake 1 – Doubting that life insurance is reliable.
All insurance companies are required to maintain reserves- such as reinsurance – in case one insurance company faces issues, there will be enough reserves to cover the insureds’ policies. These reserves, highly and strictly regulated, are enforced. And since life insurance is solely built on the trust of policy holders, the fate of the insurance industry as a whole would be at state if even ONE policy remained unpaid. In other words, there has not been an insurance claim in US history that was left unpaid for lack of funds.
Mistake 2 – Thinking that the primary purpose of life insurance is an investment, with the secondary benefit being protection.
The primary purpose of life insurance is to provide a financial benefit, usually to support one’s family in case of a serious illness or death. By all means, investment policies allow the build-up of capital over time, but that isn’t the main purpose of insurance – life or otherwise. It is primarily meant to be a financial safeguard due to a death (life insurance), health problems (disability insurance), or difficulties with activity of daily living (long term care insurance), to name a few types of insurance.
Mistake 3 – Choosing a life insurance product basing on the premium alone.
If your main factor when buying a life insurance policy becomes the amount of dollars you will be paying for it – that is a mistake. The purchase of life insurance should follow the same type of logical steps you would take with any major purchase. First – determine which insurance product suits your particular needs: whether it is to protect your family in case you are gone, to build a capital over time, against what risks and for how much money, whether you’d need a temporary coverage or permanent, long term or short term. What product and features will suit YOU the best – THEN you think about the cost. What is your ability to pay for what you need for it not to become a financial burden but still provide the needed protection. Every situation is different, every insurance policy can be built to every person’s specific requirements.
Mistake 4 – Buying a very basic life insurance policy.
Policies that pay claims upon death of the insured with no built in guarantees are the most basic and the least expensive, and definitely have their purpose. But life is full of unpredictable situations. Adding different “twists”, or riders, to the insurance policy, you can assure protection in case of an accident, or a serious terminal illness (where money can be paid before the insured’s death versus after), or if you become disabled and won’t be able to pay premiums, along with many others. Choosing the policy that’s right for you is the most important factor in buying life insurance.
Mistake 5 – Purchasing a life insurance policy and forgetting about it.
It is recommended you review your policy once every two years. Life constantly changes, as well as your financial situation, expenses and income. There could be a marriage or a divorce, a child birth or a death of a relative, a purchase or selling of real estate, new mortgage or end of mortgage payments, a raise at a job or becoming unemployed, and others. A regular review enables you to increase or decrease your coverage on existing policies, or purchase new insurance that allows you to continue to meet the demands of your current situation.
Mistake 6 – Forgetting to update beneficiaries.
A beneficiary is the person or persons who receives the proceeds due to the death of the insured. Choosing beneficiaries is a big responsibility. That is why if you’ve experienced any changes in life circumstances, including marital status, then it is important to make the necessary changes into your life insurance policy, to make sure the right person or persons will be protected.
As a whole, take care of the actual protection of your loved ones in advance, and then – enjoy your life! Excalibur Brokerage Agency provides insurance solutions that offer the best in coverage and protection to meet every special need. You can request a free quote today or contact us with any questions at any time at 800-652-9923.