When it comes to life, you can usually be sure you can’t have enough insurance. That’s what the insurance companies will try to sell you, anyway.
One of the important policies you should carry in your lifetime is life insurance. A good life insurance policy will provide some financial certainty to your loved ones when you move on from this mortal world.
There are a few deadly traps you should be aware of if you’re in the market for life insurance.
Read below to find out more about how to buy life insurance and some of the traps you should avoid.
1. Underinsurance
One of the biggest mistakes you can make when purchasing a life insurance policy is not having enough coverage. In the short-term, your premiums will be much lower compared to policies with more coverage.
In the long-term, you may be depriving your beneficiaries of a good amount of money. Think of your life insurance as the last gift you bestow upon your loved ones.
Think about what your insurance will cover:
- Any debts you leave behind
- Funeral expenses
- College tuition
- Estate Taxes
- Other miscellaneous expenses
Think of the children and how they’ll be able to cover some of those expenses once you’re gone.
2. Not Shopping Around
Every insurance company will claim their policies are the best, cheapest, or whatever word ends with “-est”.
You’ve probably purchased other insurance policies or loans before. You went through the process of comparing rates, premiums, and terms.
Purchasing life insurance is no different. Take the time to sit down and review different policies. If you live in Canada, INSURDINARY is a good place to start searching and comparing rates.
Look for major differences in coverage, rates, premiums, and terms.
3. Procrastination Station
Humans love to procrastinate just about every aspect of life they can get their procrastinating hands on. Buying your life insurance policy shouldn’t be something you think about at the last minute.
Accidents happen. It’s certainly no fun to think about, but you could die at any time. Failing to get a life insurance policy could leave your loved ones in a vulnerable situation.
This is especially true if you have minor children when you die.
4. Price Shopping
When you shop for life insurance, you might flee at the sight of the high premiums. These premiums will bring you a short-term ding to your finances.
You need to think about the bigger picture. Think about the future your loved ones will be living.
Of course, you do need to think about whether or not you can afford the premium. You should, though, take into account other factors.
Consider the coverage, the terms of the policy, and what it provides.
How to Buy Life Insurance
It’s uncomfortable to think about, but one day you will die. Life insurance is one way you ensure your loved ones are taken care of after you’re gone.
This guide should give you an idea of how to buy life insurance and some mistakes to avoid. To find out more about financial planning for the frugal mom, visit our finance section.