Life Insurance in the US: Mistakes When Buying Insurance
Life Insurance in the US: Mistakes When Buying Insurance
Life insurance is overwhelming. We get it, and we understand you. It’s broad and well, let’s be honest, the process of researching for life insurance is not even half as exhilarating as shopping and browsing for the latest gadgets or trendiest clothes. However, the reality of it all is that in spite of how lengthy and confusing it is to comprehend life insurance, it should still be one of our top priorities. And why is that? for it builds this health and financial wellness each of us must strive for.
But because of how unexciting life insurance can be, many of us fail to carefully research and assess the right type of insurance we need. Let me give you a quick tour of the most common mistakes people make before buying life insurance:
1. Overestimating the Price of Life Insurance
As individuals in this rapidly growing economy where prices rise from here and there, we assume the worse in everything. Many have put off buying an insurance policy because they think it’s too expensive or there are other things that we think are better than purchasing insurance. So, instead of putting money into an insurance plan, we tend to buy or purchase unnecessary things instead, without realizing that what we could have spent on those that are far more important went into our short-term wants.
2. Stalling in Buying Insurance
Some think it’s best to wait for the perfect time to buy insurance but the truth is, there isn’t exactly a perfect time. The longer you wait to purchase one, the higher the premiums would be. A fact about insurance policies is that premium payments are much more expensive as we grow older, regardless of how healthy your condition may be. Other than that, the future is unpredictable, over time you may develop chronic illnesses, which insurance companies would charge you much higher premiums, or worse, they will deny you coverage.
3. Not Looking for the Best Possible Option
Insurance isn’t exactly anyone’s favorite topic to talk about so we do little to no research at all about the life insurance plans we would purchase. Sometimes, we’ll walk along somewhere, then someone offers us an insurance plan, and we’d think to ourselves, “Great! I’ll take one,” without comparing it with other prices and plans available in the market. Get quotes, evaluate each policy, and check the credibility of the insurance company before making a decision. Doing your research might give you double the benefit of what you were initially offered with – independently yet responsibly shop for the best plan available.
4. Going with the Cheapest
Of course, the affordability of an insurance policy is one of our top priorities when looking to purchase one. I mean, we all want to save money, right? Who doesn’t? It’s important to consider the cost of the insurance we would avail but we should also take a look at how much coverage will this actually provide? How much protection will I get in return for all of my payments? We want what’s best for our beneficiaries, don’t we? Avoid just going with the least expensive one in exchange for cutting your loved ones short of their needs in the future.
5. Being Unprepared for the Medical Exam
One of the requirements needed, before you can purchase life insurance and determine your coverage, is a medical exam. It is a part of the application process for this allows insurance companies to know how much risk there is to insure. During the exam, weight, height, pulse, and blood pressure are recorded. You would want to do everything in your power to stay healthy before the medical exam; such as limiting salt intake or avoiding over-the-counter drugs like antihistamines. Being in your utmost health condition will give you a better shot at qualifying for insurance.
6. Skipping Financial and Legal Advice
Professionals are available to guide you in purchasing the best insurance there is. Discuss what the number one option is and how it is going to affect the rest of your financial plan, most especially if you have an existing accountant or advisor already. They know best when it comes to the insurance policies that are best tailored to fit your needs. On the other hand, if you do not have one yet, ask for recommendations and check sites like the National Association of Financial Advisors (NAPFA) or Garret Planning Network to help with your choice of life insurance.
7. Missing Premium Payments
Insurance coverage comes with a cost and these are the premium payments, which you are obliged to pay. Premiums vary depending on the risk you carry, the higher the risk, the higher the premium. Some tend to let their premiums lapse, leading to the policy not being guaranteed. Go through your policy and carefully check the provisions stating when premiums have lapsed, particularly the number of days the insurer will permit to retain the guarantee on your insurance policy.
8. Draining the Cash Value Account
One of the features of permanent life insurance is that it comes with a savings component or the so-called, cash-value account. This allows the policyholder to have a separate account in his life insurance policy where he could accumulate excess funds. The cash-value account is where the excess from your premium payment
goes after deducting the cost of insurance. However, as much as this is beneficial for it provides tax-free loans and withdrawals, or can even be used to pay future premium payments, be careful. Withdrawing too much from your cash-value account may cause your policy to lapse; therefore, requiring you to pay additional fees.
The Crux
To sum it all up, a life insurance policy is an investment. Your responsibility does not end once you have purchased the insurance. It continues way beyond that date. It is essential to regularly check and familiarize yourself with the policy to understand and comprehend it better each time. It will guarantee you, not only coverage but as well as ease when it comes to your purchased insurance policies. Reviewing is a must.