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5 Common Mistakes When Buying Term Life Insurance

By on March 26, 2014 in Insurance, Life Insurance

It’s all very easy to announce that you always look out for the best deals in life, but the reverse is often true when you buy term life insurance. It’s easy to learn how to be savvy when it comes to getting the policy you deserve and not overpay, but the key is to NOT buy into the hype that most insurance firms throw at you. You can not only rely on payday loans policies for your whole life. you should focus on insurance policies.

 

Here are some tips that may help you get the best out of your insurance deals without sacrificing proper coverage.

 

Mistake #1: Covering only one income

Now that you’re married, and are about to start a family of your own, it’s time to think about getting term life insurance for you and your spouse. Most families make the mistake of covering only one income, thinking that it’s adequate to do so, but this is where they commit a grave mistake.

 

What you should do: If either one of the partners in marriage should perish, the surviving spouse may not be able to continue. The wise thing to do would be to purchase separate policies for you and your spouse so that if either one passes away, the surviving parent can still continue working and not have to seek a different job to make up the difference in income lost.

 

Mistake #2: Ignoring a homemaker’s value

Don’t ignore the value of a stay-at-home mom or dad. Even if he or she stays home to take care of the children and maintain the household, there is an actual economic value attached to this homemaker. Unfortunately, most couples fail to see this and do not choose to insure the homemaker in the household. As a result, the surviving spouse may find it difficult to make ends meet should the homemaker pass away unexpectedly in their prime. Imagine the cost of paying for services to make up for the absence of a diseased stay-at-home wife or husband: wouldn’t it be easier to insure that spouse?

 

What you should do: Buy adequate term life insurance for your stay-at-home spouse. By guesstimating the cost of hiring external help to perform the same tasks that the homemaker does, you should be able to gauge the amount of coverage needed.

 

Mistake #3: Covering the children in lieu of the parents

It’s no secret that people get inundated with unsolicited calls from insurance agents when they place birth announcements in newspapers. Not a few proud parents actually cave in to these calls and immediately bought insurance policies for their newborns without realizing that they should have spent the money elsewhere.

 

What you should do: Once a new addition to the family is born, re-evaluate your existing term life insurance policy. If you can afford it, you may purchase a policy with better coverage for both you and your spouse.

 

Mistake #4: Buying too many riders

Some people get coerced into buying additional insurance riders that they don’t need. Besides increasing their premium and paying extra commission (that goes into the agent’s pocket, no less), these riders do not give much benefits.

 

What you should do: Evaluate your decision after doing adequate research and decide on only the most essential riders that are relevant to your needs. Avoid unnecessary riders like the accidental death and dismemberment rider which pays the policyholder upon death or accidental injury. However, the catch is that you’ll only get paid if your death or accident matches that of the stipulated term in the policy. Unless you know have a crystal ball and you how you’re going to die, I would suggest staying away from this rider.

 

Mistake #5: Thinking that buying term life insurance is a one-time activity

The only thing that’s constant is, ironically, change. With our ever-changing life (marriage, births, deaths, new jobs, to name a few), we need to realize that life insurance evaluation should be conducted on an ongoing basis.

 

What you should do: Keep your term life insurance policy on top of your mind at all times, and don’t be afraid to shop around for better deals. Never trust on unsecured loan policies that might take your whole saving later on. You may want to add on another policy or get better rates elsewhere when the time comes to renew.

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