Term insurance is a variant of life insurance that offers coverage for a specified period or a given term of years. If you, as the policyholder, die during the specified period in your policy, your beneficiaries will be paid a death benefit.
Here are the five mistakes to avoid when getting term life insurance
- Buying Inadequate Coverage: You should consider buying a life insurance policy that covers 10 to 20 times your income. A policy that covers one year of your income is simply inadequate. If you’re the breadwinner in your home, you likely have family members or loved ones who rely on your income for basic stuff such as food and shelter. Carrying sufficient life insurance coverage is one of the best ways to protect your loved ones from financial hardships in the event of your untimely death. Your dependents can, for example, invest the payout they receive in an investment fund and use the profits generated to meet their financial needs, ensuring they do not become destitute. Equally important, you should ensure that both you and your spouse have coverage even if they don’t work. You can figure out the coverage they need by estimating the annual cost of their unpaid labor (household duties, childcare) and then multiply the sum by at least 10.
- Delaying Coverage: As long as you don’t carry life insurance, your family is vulnerable if you pass on. Moreover, life insurance premiums typically increase over time as you get older, meaning you can save money by buying a policy as soon as possible. Additionally, as you age, your risk of developing health issues increases, which can increase your life insurance rates and may even disqualify you for most life insurance policies.
- Buying for a Very Short Term: The term of your policy should be based on when you won’t have anyone relying on your income, say when your kids leave for college. So, if your kids leave the nest in the next 10 years, a 10-year plan may be ideal.
- Buying Too Many Add-ons: Some people get policy riders that increase their policy rates but offer little value. Common riders include accidental death, critical illness, and waiver of premium. Ideally, the benefits of your policy’s riders should outweigh the costs. Therefore, you should only get riders that suit your insurance needs.
- Not Reviewing Your Life Insurance Policy: You should always ensure that your life insurance coverage suits your changing insurance needs. Over time, you may have become a parent, bought a home, quit smoking, or gotten a pay raise. These events may require you to raise your coverage limits or help lower your insurance rates. To ensure you have sufficient insurance coverage, you and your insurance agent should regularly review your life insurance policy to ensure it meets your current situation.
Get a Life Insurance Policy Now
Life insurance is a key component of a robust financial plan; thus, getting suitable life insurance coverage is essential for your and your loved ones’ financial wellbeing. For an insurance policy that will adequately protect you and your family, contact us at Donald Weiss Insurance Services.
