Common Mistakes to Avoid When Buying Life Insurance
Life insurance protection is essential because oftentimes death usually occurs unexpectedly. Compensation from life insurance can help sustain your family if you die by providing an alternative income. In addition, some of the amounts that your family will get help to pay debts like mortgage, car loan, and credit card expenses. This benefit can also be put towards funeral and burial expenses.
However, many folks make mistakes when purchasing life insurance:
1. Hiding information from the insurance company
Insurers will often ask various questions during your application for life insurance to determine your policy and rates. Insurance companies ask about many aspects of life, including:
- Health
- Occupation
- Family medical history
- Driving record
- Hobbies and lifestyle
The questions are part of a process called underwriting, and insurers use answers to determine if you will get coverage and the rate you will pay. Verification from medical records in possession of your doctor, prescription medicine history, motor vehicle report, and other sources reveals the truthfulness of your answers. Hiding information from the insurance company can be a ground for denial of coverage if it becomes apparent that you withheld some information during the application. An insurance company can also refuse to pay a claim if you die due to a cause relating to the information you failed to disclose.
2. Being unprepared for the medical exam
A life insurance application process might require you to take a medical exam. The exam includes recording weight, height, blood pressure, and pulse. A blood and urine sample is also likely a part of the exam. Unpreparedness for a medical exam can cost you an opportunity to get life insurance coverage, or you will get it at a higher rate. Do everything necessary to get the best results and qualify for coverage at a low rate. Some of the essential things to do before a medical exam are to avoid caffeinated drinks and limit alcohol and salt intake.
3. Not shopping around for the best rates
The pricing of life insurance policies varies widely. Do not get your insurance policy from the first company. You might end up getting a policy at a costly rate, even double by not shopping around for the best rates. Provide the same information to at least three insurers. You will get an opportunity to compare the quote and products that make up a policy.
4. Buying too little coverage
A life insurance policy should be worth the death benefit you require for your beneficiaries. Consider crucial factors like overall health, age, income, debts, and assets when calculating the insurance coverage you require. It would help if you also thought about your family’s needs so that you do not end up buying too little coverage. For instance, you may feel much coverage is unnecessary if you have paid off your mortgage and other debts. Nevertheless, you still need significant coverage if your children are young and your spouse is not working. The family will require money to cover long-term expenses if you die.
5. Relying too much on employer coverage
Many employees believe their life insurance coverage by their employers is adequate. They forget that insurance coverage will not always be with them. Avoid relying too much on employer coverage because you can lose it if you leave employment through resignation or termination. Acquire a policy that will not lapse when you leave employment in addition to or instead of your employer’s coverage.
Your family will derive the benefits of AARP Life Insurance if you avoid the five common mistakes mentioned above.