Purchasing life insurance can be time taking and confusing at the same time as it can take a couple of weeks even months for some consumers. One needs to carefully examine and understand the benefits an insurance provider is offering to make the right decision. Before you sign the insurance contract, you need to consider what you want the insurance company to do for you and your family. Not reading the fine print carefully, making hasty decisions, and giving up the policy before its maturity can cost you a lot of dollars. This is the reason, you should make informed decisions that are error-free.
Below we have mentioned some costly mistakes you should avoid when purchasing a life insurance plan.
Not having a clear objective
When you are presented with a life insurance plan, you need to make sure that you are aware of the reason why you should buy. If you are not sure about that, you should ask the insurance agent or an advisor to conduct a needs analysis to determine whether it is worth spending or not. If they are unable to carry out an acceptable needs assessment, then it might end up benefiting the seller, not you. This is the reason; you should have a clear objective of having a life insurance policy so you can make a wise decision. Not having a clear objective or goal can lead you towards buying a wrong or insufficient policy.
Choosing the wrong type of life insurance policy
Term and whole life insurance are two main types of life insurance policies. Term life insurance remains in place for a particular period of time (agreed in the contract) and pays out a specific death benefit. You can buy it either for 10, 15, 20 or 30 years. On another hand, whole life or permanent life insurance doesn’t expire and offers coverage for the rest of your life. Most consumers choose the wrong type of policy that is either expensive or offers fewer death benefits than required. That’s why you should do proper homework to determine the right type of policy as per your needs and requirements. If you are not overwhelmed by the available options and unable to make the right choice, you should consult with a financial advisor or a professional insurance agent to reach the right and profitable decision.
Not comparing life insurance rates and plans
Just as you do for buying day-to-day stuff, you should shop around when it comes to buying a life insurance plan. It helps you make sure you are getting the best premium rates and sufficient coverage too. Signing up for a life insurance policy without getting multiple quotes and comparing rates could end up with expensive premiums and inadequate coverage. This is where getting multiple quotes from different insurance providers and comparing available plans allows you to choose a plan that fits your needs.
Not understanding the details before signing
A life insurance contract is one of the most important personal documents you sign in your life. But most people delegate the task of filling the form to insurance agents. And they really don’t know what is mentioned in the contract. So, be informed about what you are about to sign and what is mentioned in the contract. The insurance contract form may include details like your current health status, profession, family history, and other information related to your lifestyle. All the information must be authentic as your claims might be rejected if any of the information is misleading or incorrect. That’s why, be sure to go through the contract before you sign and prevent errors if any.
Not verifying your policy details
Once you are done with your policy, take a couple of minutes and go through the documents to verify the details. Since a life insurance policy seems like a long document to read, most insurers share key components of the policy in an easy-to-read format. So, make sure to read the policy benefits information and be quick to contact the insurer if something is missing as agreed.