Making these mistakes with your life insurance coverage can be costly.
Securing a life insurance policy is a great way to ensure the financial security of your loved ones in the event of your unexpected death. Unfortunately, the process of securing life insurance can be confusing, and there are opportunities to make a misstep. As mistakes or misinformation can end up costing you, it’s important to avoid them if at all possible. Here are some of the most common life insurance mistakes to be aware of.
- Securing the Wrong Amount of Coverage
Many people struggle to determine how much coverage to secure. If you have a family including young children, you’ll want to secure a policy that offers a lot of coverage. If you are a breadwinner in your family, you should secure coverage equivalent to at least seven times your salary, plus enough to pay off your debts and pay for your children’s college education. If you are a stay-at-home parent, you may not feel you need as much coverage as your spouse or partner but you should consider the same reasons – costs of child car, college educations, mortgage payments or payoff, etc. Just because you are a stay-at-home parent doesn’t mean you don’t have the same household and family expenses. You should secure enough life insurance to cover the cost of childcare and other services that you provide for your family.
- Choosing the Wrong Policy
For many families, term life policies will do the job. These policies are affordable and offer coverage for a set period of time, such as when children are growing up or when you are paying off debts. People can be convinced to secure permanent life insurance or “whole life” policies even instead of term which is often more affordable. When speaking with your insurance agent, have them fully explain the differences in the types of policies to you so you can pick the best option for your family.
Relying on Work-Sponsored Life Insurance Alone
Finally, many people have the opportunity to secure life insurance coverage through their jobs. However, this coverage is likely not enough to offer your family the prolonged financial protection they might need. Additionally, life insurance coverage offered by your employer may only be valid while you are working at the company. Should you leave the job, you might also lose this coverage. It is a good idea to check with your HR dept. on the details of what is offered. And, we strongly recommend supplementing employer provided life insurance with a personal policy of your own.
These are some of the common life insurance mistakes to avoid. Do you need help navigating through the life insurance market? If so, contact the experts at Randy Jones Insurance Services in Pleasanton, California. Our dedicated team is ready to assist you with all your coverage needs today.