Life Insurance is one type of insurance that many people aren’t quite sure if they need and if they realize they DO need it, they aren’t quite sure of the type of life insurance most preferred and in what amount. Before you purchase life insurance, you need to be aware of 5 mistakes when buying life insurance so when you do make that investment, you will know the best type of life insurance most suited for your particular needs. Protect the people who depend on you the most with life insurance.
If you have people or loved ones who depend on you financially, it is recommended that you have a life insurance policy in place in an effort to maintain the same financial backing for your loved ones should something happen to you. Below are some common mistakes.
1. Not Buying Enough
Many people have a life insurance policy provided through their employer, but that amount may be inadequate to provide for your family should something unexpected happen to you. You must factor in yearly income, investments, cost of living expenses, medical bills, annual bills, monthly expenses, education costs, and funeral expenses when determining how much is enough.
Making sure you have adequate life insurance to allow your family/loved ones to maintain their current lifestyle if you die unexpectedly is priceless. The rule of thumb is to purchase ten to twelve times your income to arrive at an amount of relevant life insurance coverage; however, it is always recommended you contact your local N.C. independent insurance agent to discuss your particular financial portfolio.
2. Waiting Too Long
Many people think life insurance is for “older” people, but the unexpected can happen at any age, so having a life insurance policy in place as early as possible is most beneficial. Term life insurance premiums are actually higher the older one gets so despite the belief that it’s better to wait until you are older is not true.
Furthermore, insurance premiums for older adults may be higher when health starts to decline, so buying at a younger age may also mean a lower premium due to good health. Waiting too long to purchase life insurance may leave your family susceptible to financial disaster if something unexpected happens to you.
3. Falling for Policy Riders
Be careful when falling for policy riders that may provide little benefit to you, but will provide extra commission to the agent selling it. Some of the riders you may have thrown at you may include accidental death or income replacement, but before you fall for policy riders, you may wish to contact your local N.C. independent insurance agent to inquire whether it will only increase your premium versus additional insurance coverage.
4. Failing to Routinely Assess Your Life Insurance Policy
Life changes and when it does, so might your need for a life insurance policy adjustment. Looking at your life insurance coverage on a routine basis will keep your coverage in tact to validate your current life and financial situation, so what worked for you 10 years ago, may not be sufficient today.
5. Failing to Buy Longer Term Coverage
Many people may consider shorter-term insurance coverage, but that is a common mistake. Yes, you may save a few more dollars by investing in a shorter-term coverage policy; however, you need to focus on the life ahead of you to save money in the long run. If you are planning to have children or already do, consider buying term insurance long enough for when your children will be finishing college or starting their own lives. Depending on your children(s) age(s), that may be a 20-year plan or it may be a 30-year plan.
Keep in mind that life insurance is a significant part of a healthy financial plan for you and your family so that your family won’t be vulnerable to financial ruin should something happen to you. Contact us at Paramount Insurance Agency at 866-869-3335 with any questions you may have regarding life insurance, the amount you may need, or making adjustments to your current life insurance coverage.