Life Insurance Mistakes To Avoid

Life insurance can be a complex topic that may end up causing you a lot of headaches if you don’t fully understand it. But learning about life insurance can be a valuable investment for you and your loved ones. Some life insurance experts recommend you avoid the following common mistakes and advise on how you can avoid them.

Having No Life Insurance

Life insurance will provide your loved ones the financial benefits they need once you are gone. Having no life insurance can leave your family with significant debt. Unfortunately, only 57% of Americans have a life insurance policy. It’s easy to overestimate the costs of life insurance rather than considering the returns. The good news is that many life insurance policies, if you are in good health, may cost slightly more than a Netflix subscription. In other words, it’s a good investment.

Breadwinners are the only ones purchasing life insurance

If you are the primary source of income, you have probably considered purchasing life insurance once or twice, but what about if you are not? A stay-at-home spouse, for example, contributes a huge value. If this person is no longer there, the expenses need to be covered. Childcare and housekeeping, for instance, can be covered with a life insurance policy. If the surviving person steps in to cover the cost of these contributions, it will not only cut down on their income but also contribute negatively to their lifestyle, physical and emotional wellbeing.

Not having enough life insurance

Not having enough coverage is another common mistake to avoid. The best thing to do is figuring out what type of coverage you need prior to purchasing a policy. If you want to buy a life insurance policy to cover funeral expenses, consider the cost of a funeral, which can be approximately $8,000-$15,000. If you need a policy to replace your income or provide for your family, make sure you have enough coverage.

Employer-provided life insurance

Experts warn about job-based life insurance – they may not provide enough coverage. These policies usually amount for a year’s worth of salary or less. Group life insurance will not provide a significant amount of payout. Also, if you change jobs, you are left with nothing. Whatever you do, don’t make employer-based coverage your only option.

Waiting too long to get it

Most people think life insurance is something to think about in the future, but it’s quite the opposite. Waiting too long will increase costs. You can get better rates when you are young.

Not updating your beneficiaries

Your beneficiaries are the people who will be compensated once you die. It’s good to revisit your policy regularly and update your beneficiaries accordingly.  Keep in mind the beneficiaries listed in your policy supersede whatever you write in your will, so make sure you update this important piece of information as needed.

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