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The following is a guest post by Philip J. Reed. Enjoy!
1. Thinking It’s Too Expensive
The economy is tough right now, and most families are watching every penny. However, this is not an area you should completely eliminate from your budget. Without this financial safety net, what would your family do if they lost the primary breadwinner? The fact of the matter is that, without life insurance, your family could be left adrift in very uncertain financial waters. You don’t want that to happen to them, so you need to plan today. Policies may indeed get expensive, but to find a policy you can afford, review several life insurance quotes.
2. Believing It Can Wait
If you’re young and healthy, it’s easy to just avoid this issue altogether. After all, nothing could happen to you, right? Wrong. Tragedies happen every day, and because we can’t predict them, the only thing we can do is prepare ahead of time. Even if you’re single and without children, you should have enough life insurance to pay your burial expenses. Of course, your responsibilities and your level of coverage need to significantly increase with a marriage or children. Make sure your coverage will provide for them.
3. Underestimating Your Needs
Many people underestimate how much life insurance they really need. They may see a policy that adds up to a year or two’s salary and think that must be enough. To choose the right amount of coverage, factor in your current debts, and also the living expenses for your family for a number of years, and college tuition for your children.
Providing for your family after you’re gone might not be the way you imagined things going, but if it comes down to that, you need to make sure they will be well taken care of. Insurance can give you that peace of mind, and it can give your family some much needed financial security at a time when they will need it the most.
4. Assuming You’ll Be Able to Afford Bigger Payments in the Future
Some companies offer “teaser” rates that balloon over time. Many policy holders allow their coverage to lapse when the premiums escalate, leaving them without that precious coverage. Try to choose a policy with fixed rates, so that you don’t end up spending more on insurance than your family can afford, which will have the opposite of life insurance’s intended effect of keeping you financially afloat!
5. Ignoring the Details
Never buy a life insurance policy without understanding the details. Some have tight restrictions on when and how they will pay. This is especially true with cash-value policies that usually include complicated payment and return structures. We understand that details can get confusing. That’s why it’s important to work with an agent that you trust, and one that will have the patience and understanding to help you make an informed decision.
According to one of the top insurance research firms, LIMRA, life-insurance ownership has dropped to the lowest point in 50 years. This means that 35 million Americans, or 30 percent of the population, have no coverage at all. Don’t let your family go unprotected in these hard economic times. Compare life insurance quotes, and find the correct policy for you and for your family. After all, ignoring life insurance totally can easily turn out to be mistake #6.
How about you all? Do you currently have life insurance? If so, how did you go about figuring out how much coverage to obtain? If not, why do you feel it is unnecessary?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- Personally, I have not yet in life had to deal too much with the considerations involved in obtaining a life insurance policy. This is due to the fact that I am not yet married, have no children, and I am confident that while my relatives are not rich by any means, they could no doubt pay to have me buried if the need arose. Because of these considerations, I do not feel that I need life insurance currently.
- In my first job out of undergrad, there was a default, no-charge-per-month life insurance policy that was equivalent to one year’s salary (likely to cover burial expenses) that I had while working there, but that’s the extent of my experience (sorry to say).
- @ The question of if you actually need life insurance?
- While I think that all of the mistakes and corresponding considerations listed above are very logical and well thought out, I would first encourage readers to take a good hard look at their situation PRIOR to jumping quickly in to buying life insurance. You should ask yourself very seriously, “Is life insurance something I need?”
- If your situation is similar to mine, despite how low-cost a policy would be, I simply don’t think that I need to have life insurance until I have children.
- I explored this topic of if I should buy life insurance earlier than required in life at the following link, if you’re interested in reading – Should I Buy Life Insurance Even Though I Don’t Need It?
***Photo courtesy of http://www.flickr.com/photos/dullhunk/4406032433/sizes/o/in/photostream/