5 Mistakes to Avoid When Buying Life Insurance
Buying life insurance involves proper planning. A simple mistake when buying life insurance can be costly to say the least. In most cases, this can easily be avoided by simply working with an independent life insurance agent who can give you objective advice and shop around for the policy that best fits your needs. We have compiled a list of 5 mistakes that people make when it comes to life insurance.
Waiting Too Long to Buy – Waiting too long to buy insurance can be problematic. Your health could worsen leading to higher premiums, you could become uninsurable altogether or worse – you could die without having coverage. You should buy life insurance when you’re young and healthy (assuming that you have a need for it of course) and lock in lower premiums for the life of the policy.
Buying Unsuitable Term Length or Coverage Amount – Most people don’t take the time to do a comprehensive analysis of their needs. They may simply use a multiple of their salary or pick a premium amount that they want to pay yearly to determine coverage amounts. The most comprehensive way to determine how much life insurance you need is to take into consideration your current liabilities (mortgage, credit cards etc.) and future liabilities (income to be replaced) against any assets that will be available. Once the analysis is completed, you can figure out how much it would cost you and tweak the numbers from there if necessary. Buying the right amount the first time will prevent you from having to purchase more coverage later which could lead to issues described in mistake 1 above. If you choose term, it is important that you determine a term period that will cover you until you are “self-insured”. That usually happens at retirement when you have taken care of all your major financial obligations in life.
Not Shopping Around – Life insurance companies differ from one another by product offerings, underwriting requirements, financial strength and premiums charged. It is important to shop your coverage through an independent agent that has access to multiple insurers. Based on your particular health situation, an independent agent will be able to match you with the best company based on policy features, underwriting standards and cost to meet your objectives.
Buy Wrong Product – Buying the wrong product can be costly. For instance, permanent coverage is much more expensive than term. Some people buy or are talked into buying a permanent insurance policy only to find that they can’t afford the higher premiums over the long haul. They might let their policy lapse which leads to no coverage at all. And if they let it lapse early on, there is little or no cash value for them to recover. You can always buy a term policy and convert it to a permanent policy in the future when you have the ability to pay the higher premium. That is, if you need permanent coverage at all. For most people, term coverage until retirement is the best way to go.
Not Being Truthful on Application – Insurance companies are very good at finding out information about you. They will not only ask for your medical records in some cases, but they will also look you up in the Medical Information Bureau (MIB), Motor Vehicle Records (MVR) and Pharmacy Database. They will compare any information in your application against what they find in the three databases mentioned above. They will also have the information from your paramedical exam to review as well. It is best to be as truthful as possible on the application. A company can decline you if they found out you weren’t truthful on your application. They can also contest your death benefit if you they found out you weren’t truthful on your application and you died within two years of owning the policy. Let an independent agent go through the application with you and shop your case to multiple insurers. They will be able to match you with the best company based on your particular health situation.
We would welcome the opportunity to give you a free needs analysis and present multiple coverage options to you. We have access to over 40 insurance companies and will use all of our resources to get you the best coverage option available. Please feel free to give us a call at (888) 687-9444 or email us at info@archstoneagency.com if you have any questions.
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com. You can also visit our website at www.archstoneinsurance.com.
