Mistakes to Avoid when you Buy Life Insurance

Would you buy a car or home without doing some comparison shopping? Certainly not. Then, why should you do so when you are buying life insurance? This is also a major purchase that can have long-term implications. The type and number of lie insurance policies available are undoubtedly confusing due to which people make some common mistakes. It creates a lot of problems for them in the future, which you wouldn’t want to deal with. Highlighted below are the top mistakes to avoid when you are buying life insurance:

Only looking at price  

Whether you are buying term (temporary) or permanent life insurance, you should consider the guaranteed features of the policy and the financial strength of the company. If you are getting a term life insurance policy, compare the cost of the policy, the death benefit and the rating of the insurers with the rest in the market. Doing so can enable you to get the most insurance for a long period of time and at the best rate from a good company.

If you are looking for permanent life insurance, along with term, you should also consider the interest rate being offered by every policy. Choose the variables that are most important to you and compare them in order to make the right choice. Never make the decision only on the basis of price.

Opting for term insurance only  

Thanks to advances in the medical field, people have longer life expectancies due to which it is not recommended that you only go with term insurance. Sure, when you want to buy life insurance, you want a cost-effective policy, which you get when you opt for a 30-year term policy. But, what if the policy expires? This could create problems for your beneficiaries later on. Therefore, it is better to opt for either a permanent policy or get both i.e. a term and permanent life insurance policy. 

Not buying enough coverage 

One of the biggest mistakes that people make when they are buying life insurance is that they underestimate the amount of insurance required for protecting their families. How much money will be required by your beneficiaries and for how long will help you in determining the amount of coverage that will be required. 

Considering illustrations as fact  

When agents are selling life insurance policies, they will do some ‘illustrations’ for demonstrating the cost of insurance and the future cash value you will receive. However, you should be aware that the figures and statistics used in these illustrations are only projections. They are not the numbers you will get with your life insurance policy. Unless you see the word ‘guarantee’, you should not believe in any of the numbers given in illustrations because the reality would be very different. The actual premiums may be higher, the actual interest the policy earns may be lower and other costs could also rise if it is a non-guaranteed contract.

Avoid these mistakes and you will be able to buy a life insurance policy according to your needs.