7 Mistakes To Keep Away From When Purchasing Term Life Insurance

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7 Mistakes To Keep Away From When Purchasing Term Life Insurance

If you are thinking about canceling a current policy, you might want to examine these 7 potentially dangerous mistakes people make with their life insurance before you do.

1. "I'm all set for life insurance!"

According to a recently available review of medium income Americans, most respondents felt that individuals should have some life insurance, but thought that it should only be adequate to cover existing financial debt and funeral costs. Surprisingly, only about 20% felt that term life insurance should substitute the pay check of the deceased for the surviving family's benefit.

As a matter of fact, possessing a life insurance coverage that is equal to seven to ten times one's existing salary is the minimal recommendation for someone with young kids.

2. "Life insurance? I'd rather not talk about it."

For almost all consumers, contemplating about death is more than a little awkward. Yet, most people do want to make sure their close family are financially comfortable after their passing.

Find a some minutes to sit down with your significant other and ask the question, "How would you and the children make it if I were to pass away?" It is imperative to handle this topic now.

3. "My father told me to have coverage comparable to 7 times my salary."

In today's environment, that is not as reliable of a measure because of the varied life scenarios found today. Many characteristics that were not so common 50 years ago can be found easily today. An unmarried person with no children has much less of a requirement for insurance than the family with a stay at home spouse and 4 young youngsters.

A more precise strategy is to make a list of the areas that you want to protect. How will your partner manage the home loan, taxes, utilities, put food on the table, maintain the vehicle, and many others?

4. "I never thought of that."

Benefits such as health insurance, retirement accounts, youngster care credits, etc. all cease at the death of an employee. The dilemma that needs to be made then is, " If I die, that subsidy disappears. How will my family pay for health-care after I'm gone?" Part of the solution of course is to make sure your term life insurance policy will pay enough money to cover the new health insurance bill.

5. "I'm way too busy to worry about life insurance now."

It's not hard to lose sight of the long term view when we are so consumed with managing our day to day lives. A rule of thumb is to intend that your children will be "dependent" until age 25 due to college and finding a profession. If your youngest is 10 today, you would want to have at least a 15 year policy to cover that risk period.

6. "It's too expensive."

That is a huge miscalculation in thinking, as it is possible to find a plan that fits your needs and your budget. Today, term life insurance is much more affordable than permanent insurance, and is the perfect tool for addressing your fiscal exposure.

7. Bought it and forgot it.

Are you the same person now that you were 5 years ago? If we are truthful the answer is, "No." Maybe there have been some changes to your way of life such as getting married, having kids, buying a house, etc. These huge life events are exactly why you should review your life insurance policy regularly to make sure that your policy covers your "new" situation.

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