7 Blunders To Avoid When Purchasing Term Life Insurance
If you are considering canceling a current policy, you may well want to take a look at these 7 mistakes people make with their life insurance before you do.
1. "I'm all prepared for life insurance!"
According to a recent survey of middle income Americans, most respondents felt that people should have some term insurance, but assumed that it should only be necessary to cover existing debt and funeral costs. Surprisingly, only about 20% felt that term life insurance should provide the earnings of the deceased for the surviving family's sake.
In fact, having a life insurance coverage that is comparable to seven to ten times one's recent salary is the minimum recommendation for someone with young dependents.
2. "Life insurance? I'd rather not talk about it."
For most individuals, thinking about death is more than a little unpleasant. Yet, almost all people do want to make sure their beloved are financially secure after their passing.
Find a couple minutes to sit down with your husband or wife and ask the question, "How would you and the kids make it if I were to pass away?" It is important to address this topic at this time.
3. "My father told me to have coverage equal to 7 times my salary."
In today's society, that is not as useful of a measure because of the different life circumstances found today. Many dynamics that were not so common 50 years ago can be found easily today. An individual person with no kids has much less of a need for insurance than the family with a stay at home spouse and 4 young small children.
A more correct method is to make a list of the things that you want to protect. How will your spouse manage the home loan, taxes, utilities, put food on the table, keep up the automobile, etc?
4. "I never thought of that."
Benefits such as health insurance, pension accounts, child care credits, etc. all cease at the death of an employee. The subject that needs to be asked 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 funds to cover the new health insurance bill.
5. "I'm much too busy to worry about life insurance now."
It's easy to lose sight of the long term view when we are so consumed with managing our day to day lives. A general guideline is to plan that your kids will be "dependent" until age 25 due to college and finding a career. 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 expensive."
That is a huge oversight in thinking, as it is possible to find a policy that fits your needs and your budget. Today, term life insurance is much more affordable than permanent insurance, and is the perfect instrument for handling your financial risk.
7. Bought it and forgot it.
Are you the same person now that you were 5 years ago? If we are sincere the response is, "No." Maybe there have been some changes to your way of life such as getting married, having kids, buying a house, etc. These major life events are exactly why you should review your life insurance policy from time to time to make sure that your policy covers your "new" situation.
The How To Guideline To Paying A Lesser Price To Get Your Individual Term Life
You've made a decision to purchase life insurance. In that case, you've made a fantastic decision for your family and those you care for. However, buying life insurance shouldn't break your budget. Make note of the following options which can help you save both time and money!
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