Choosing your life insurance coverage can seem a little daunting. With the right research and planning, along with some professional guidance, you can find the perfect policy to meet your financial needs and goals.
Because this is such a big decision, it is important that you understand exactly what you need from your life insurance policy, as well as what you are actually getting. Keep reading to learn more about a few common mistakes many individuals make when purchasing their life insurance policy. We want to help you avoid making these same mistakes!!
Thinking you don’t need life insurance.
One of the most common mistakes people make—especially younger adults—is opting to not purchase a life insurance policy at all. When you’re young, healthy and active, it’s hard to think of life being unpredictable; if you have people you care about relying on your income for their financial support, it’s so important to make sure you have them protected in the event of your premature passing. Ask yourself the following question, “If you passed away today and did not have any life insurance in force, does this create a financial hardship for those you are leaving behind?”
Not purchasing enough life insurance.
Many individuals prioritize cost when choosing their policy and will sometimes choose a cheaper policy rather than the one they actually need based on their overall financial situation. While not “breaking the bank” on your life insurance premium is completely reasonable and an important part of your final decision, keep in mind the purpose of your life insurance policy is to replace your income in the event of your death; not purchasing enough coverage means the policy may not fulfill its purpose when your family needs it the most. As a guideline, we recommend purchasing an amount of life insurance equal to 10x your annual income.
Never reviewing your policy.
Life changes like marriage, divorce, having children, or buying a house (amongst others) can affect your life insurance needs. When you go through a life cycle event like this, it’s best to take some time to review and adjust your policy to fit your new needs. Please note the LCLI team contacts each client annually for a review of their coverage. You should expect this level of service from your life insurance provider.
Being dishonest about your medical history.
Your premium is based on the risk level you bring to your insurance company if you pass away prematurely. “Risk” can cover a lot of things, with the most common being health concerns like cancer, heart disease or diabetes, or certain habits like any tobacco usage or any dangerous activities or avocations. Omitting this information from the insurance company to get a lower premium is not worth the risk of compromising your policy. If you pass away and were not honest with the information you disclosed to the insurance company, they could deny future claims and cancel your policy. As tempting as it may be to get a cheaper policy, being honest is always your best bet!
Purchasing life insurance is important for your family’s financial security, and we understand what a big, daunting task it can be. Working with a team like ours can help you make the right decision for yourself, your family and your budget. Reach out to work with our LCLI team today!
