Choosing a life insurance policy can be difficult—simply because there are too many options. However, it shouldn't be too complicated if you know what your needs are. Unfortunately, people often make mistakes when buying coverage. Below are some of the most common ones you should avoid.
What Are the Most Common Life Insurance Errors That People Make?
1. Purchasing the Wrong Amount
If you buy too much, you'll pay more than you need to each month. If you buy too little, your survivors may not have what they need. Decide what your financial goals are. Do you want to pay off the mortgage? Put your kids through college? Simply pay for your final expenses? You won't know how much coverage to buy until you decide what you want the death benefit to cover.
2. Waiting Too Long to Buy
Too many young—and even middle-aged—people forego buying life insurance because they feel it isn't necessary until later in life. If you have debts, children, or a spouse, the best time to buy coverage is right now, before something unfortunate occurs and before you age further and the cost goes up.
3. Relying on Work Coverage
Many workers receive life insurance benefits through their employer. Sometimes, this amount is sufficient, though other times it’s not. Most work policies pay out about the same amount or twice the amount as your annual salary. If your long-term financial goals require more than that, don't rely solely on a work policy.
4. Buying the Wrong Type
Term life is an inexpensive, no-frills policy that lasts only for a pre-set term. Once it expires, you must renew it at a more expensive premium. Whole life costs more, but it offers an investment component and, sometimes, disability coverage. Understand what you're buying and what you need so you don't buy the wrong type.
To have an experienced agent help you select a life insurance plan, contact Mid-Alliance Insurance Associates, the premier insurance agency in Lincoln, NE. They serve clients throughout Lancaster County and Southeast Nebraska. In addition to life insurance, they also carry auto, home, health, and business insurance. Check out their website to learn more about the company or call (402) 421-7800 to request a quote.