If you have life insurance then congratulations! As many as 43% of people do not have any form of life insurance. They are taking grave risks with the well-being of their families should the worst happen and they die prematurely. Life insurance should be an essential part of any insurance portfolio.
But how do you choose the right one for you when there are so many options available? Avoiding the five common mistakes we identify below will help you make the right choice for your situation.
As we get older our health inevitably deteriorates. You may already be suffering from a medical condition by the time you start looking for life insurance. Not surprisingly in this scenario, your options for good cover at a good price will have also decreased. Therefore, don’t leave it too late before putting life insurance in place.
2. Making choices based on price
With life insurance, it’s not always possible to compare like with like. There are many variations to the different policies so simply making a choice on price alone is not a good idea. Just because the policy from Company A is cheaper than that from Company B does not mean that you are getting better value for money, nor does it mean that you are getting the right cover for you.
3. Not having enough cover
Often we make the mistake of under-insuring ourselves. You will need to factor into your calculations the costs of medical care, any existing debt commitments you have as well as your inability to work. A common rule of thumb is that life insurance should provide seven to 10 times the insured person’s annual salary. Make sure you have enough cover to protect you in the worst case scenario.
4. Not insuring your spouse
A debilitating illness or the death of a partner can be just as devastating to the family’s finances as you are forced to take time off work to care for your partner or the children. Making sure you have adequate cover for both parties will take some of the pressure off at a very difficult time.
5. Not reviewing your policy
Our circumstances are changing and evolving all the time and so the life insurance you purchased 15 years ago may no longer be the best choice for you. Perhaps your children have now left home or you have a bigger mortgage, whatever it may be it’s important that you regularly review your life insurance to ensure that it is still working for you.
Life insurance is not an expendable expense. Make sure you make the sensible choice and get the right life insurance to protect your family.