Owning a life insurance policy can give you a feeling of security and peace of mind. But when it comes to the world of life insurance things can get complicated quickly. Here are some tips to make sure you avoid some common pitfalls.
Keeping It a Secret:
I come across many people who don’t want their kids to know that they have a bunch of money coming to them when they die. The result is that they keep their life insurance policy a secret. The mistake here is that the secret might remain a secret after you die, and your kids may never collect your life insurance death benefit. Instead of keeping it a secret, let them know you have a policy, and you don’t need to disclose how much money the death benefit is. This will insure that the policy you bought serves its intended purpose.
Buying From Your Uncle:
Many people have a family member or good friend that might be in the insurance business and there may not be anything wrong with working with them to find a policy. On the other hand, there just might be. If your friend or family member just got into the business yesterday, tread carefully and make sure you are getting good advice.
Buying life insurance is not like buying a car. Make sure you understand what you’re buying and don’t feel ashamed to ask questions.
CC image courtesy of Mario Campello
Perhaps get a second opinion. On the other hand, if your family member has been in the industry a long time and can help you shop the marketplace for the best life insurance quotes and right policy, then we recommend that you do work with them.
Sign and Drive:
Buying life insurance is not like buying a car. Make sure you understand what you’re buying and don’t feel ashamed to ask questions. Understand if there are any exclusions, waiting periods, and the type of policy you have. If you are buying a term life insurance policy make sure you know when it is set to expire, and if you have options to converting your policy to a permanent life insurance policy.
Remember to Review:
Don’t make the mistake of filing your policy away to never look at it again. It’s a good habit to review your policy and beneficiary designations annually. In the fast changing world we live in today, the last thing you want is to forget to update your beneficiary designation and have your death benefit go to your your ex. Even if you have a will in place, life insurance beneficiary designations supersede what your will says.
Listening to Gurus:
Many “so called” financial experts give blanket advice on life insurance. For example you might hear, buy only term life insurance for 20 years at 10 times your annual income. It is these kind of recommendations that leave people under or over insured. Life insurance decisions should be based on your life. Working with an experienced life insurance agent can help you determine how much insurance you need and what makes sense for you and your family. Don’t take the guru advice; find what works for you.
Liran Hirschkorn is an independent life insurance agent, and expert in high risk life insurance. He helps individuals across the country find the right type of life insurance coverage at the best possible rates.