Let us simplify matters for you as far as life insurance is considered. If you have assets and beneficiaries, then this is the most important investment you will ever make! Yes, it doesn’t feel good to think about your own demise. However, if you take out the time to do that, you will have secured your family’s future financially.
So, now that we are on the same page regarding life insurance, let us look at the next important decision for you to make. Which life insurance do you intend to get? Why? Are you sure what you are signing up for will be sufficient? Not all life insurance policies are the same. That’s why you need to educate yourself on this topic.
Let us look at a few mistakes that most beginners will make when they purchase life insurance for the first time, and the consequences of such errors
A Policy Not Meant for You
When it comes to life insurance, you can buy term policies that are centered on a death benefit and time period. You can purchase policies of varying lengths, including 5, 10, 15, 20, and even 30 year-long terms. Or, you can purchase permanent life insurance, which as the name suggests, will last as long you endure. It is divided into subcategories, such as whole, variable, and universal life insurance policies. The latter are linked with investment vehicles while the former is related to a cash value that you build initially and then draw against later on.
So, think of what you want to achieve with your insurance policy before blindly buying one. For instance, if you want just enough for your family to pay for the mortgage after you, then you should look towards term insurance. On the other hand, if you want them to benefit due to returns on your investment, then a permanent policy might be in order.
You Leave It Off Because You Think You’re Too Young
If you wait until you are older, you will be paying more for the same kind of insurance. The cost gives up if you are not of sound health. Therefore, don’t think you are too young to purchase a life insurance policy. Rates increase as you age and become less healthy.
You Don’t Know What You’re Getting Into
As soon as you get the policy documents in hand, you need to start reading them from cover to cover! Yes, they are dry and unappealing but you need to know everything there is to know about it. Sift through the Product Disclosure Statement as well. It is essential that you know exactly what kind of cover you have and whether there are any exclusions for you to worry about.
Failing to Find Out About Your Premium Paying Term (PPPT)
This term refers to the period when you have to pay to the insurance company consistently. Since this term can vary from policy to policy, refer to the policy schedule to be sure. Knowing the PPT would mean you know how to pay and the return on your policy. Thus, you will only depend on money that is certain to come your way!
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