Did you know that in 2020, only 54% of Americans had life insurance? Many people don’t purchase life insurance because they don’t understand how to shop for the right type of policy.
Are you looking to purchase life insurance but don’t know where to start? If you know the typical life insurance shopping mistakes to avoid, you’ll easily be able to find an affordable policy that works for your family situation.
Keep reading to learn about four common life insurance shopping mistakes to avoid!
Table of Contents
1. Not Choosing the Right Policy
It’s important to know that life insurance comes in two forms: term life insurance and permanent life insurance.
Term life insurance provides coverage for between 1 and 30-year terms, and most people choose this life insurance for its flexibility. On the other hand, permanent life insurance lasts your entire lifetime.
Term life insurance typically has lower monthly premiums and is sometimes renewable. Some people purchase both term and permanent life insurance due to their family situation.
Either way, you’ll need to make sure you know which type of policy you’re actually buying, so you’ll get the coverage you need.
2. Not Buying Enough Insurance Coverage
It’s important to remember that the main purpose of life insurance is to replace lost income if you pass away unexpectedly. Make sure you don’t forget to consider the cost of things like:
- Mortgage payments
- Child care and college tuition
- Credit card debts
- Car payments
- Personal loan payments
Although you can save money by buying less life insurance coverage now, it will cost you more later if you underestimate how much coverage you actually need.
3. Not Reading the Terms and Conditions
Don’t make the mistake of purchasing a policy before you read the insurance terms and conditions.
Make sure you understand the exclusions or events not covered by the policy you choose. Some policies don’t provide coverage for specific medical conditions or if a death results from doing a high-risk activity or sport.
You’ll also need to be aware of how the claim is processed and how soon the money is distributed after your death.
4. Not Comparing Life Insurance Policies and Rates
Don’t limit yourself by going with the first life insurance provider you come across. Comparing insurance costs and policy types is essential to finding a policy that suits your needs but doesn’t kill your budget.
You’ll want to start your search by:
- Reading online reviews
- Reviewing the financial rating of the company you’re considering
- Looking at what optional riders (additional coverage) you can purchase
You should also consider working with independent agents because they contract with multiple insurance companies. You’ll get a better choice of different prices and features from separate life insurance carriers.
Check out this site to learn more on life insurance and start the process of requesting quotes today.
Life Insurance Shopping Mistakes
Now that you know the common life insurance shopping mistakes people make, you’ll be able to use these tips to find a policy that works for you.
Remember to take your time, do your research, and don’t be afraid to keep asking questions.
To learn more, check out our blog today for finance, lifestyle, and health tips that will change your life!