7 Blunders To Keep Away From When Considering Term Life Insurance
If you are thinking of canceling a policy, you may well want to take a look at these 7 blunders consumers make with their life insurance before you do.
1. "I'm all set for life insurance!"
According to a recent survey of middle income Americans, most respondents felt that individuals should have some term insurance, but felt that it should only be necessary to cover current debt and burial costs. Surprisingly, only about 20% felt that term life insurance should replace the earnings of the deceased for the surviving family's sake.
Actually, possessing a life insurance plan that is comparable to seven to ten times one's recent salary is the least suggestion for someone with young children.
2. "Life insurance? I'd rather not talk about it."
For most people, considering about death is more than tiny distressing. Yet, almost all people do want to make sure their beloved are financially protected after their passing.
Determine a few minutes to sit down with your husband or wife and ask the question, "How would you and the kids make it if I were to pass away?" It is essential to discuss this subject at this time.
3. "My father told me to have coverage equivalent to 7 times my wages."
In today's world, that is not as useful of a measure because of the diverse life circumstances found today. Many characteristics that were not so common 50 years ago can be found openly today. An individual person with no kids has much less of a need for insurance than the family with a stay at home wife or husband and 4 young kids.
A more correct approach is to make a list of the things that you want to protect. How will your companion manage the home mortgage, taxes, utilities, put food on the table, care for the automobile, etc?
4. "I never thought of that."
Benefits such as a health care policy, retirement accounts, child care credits, etc. all cease at the death of an employee. The question that needs to be asked then is, " If I die, that subsidy disappears. How will my family pay for health-care after I'm gone?" Part of the response of course is to make sure your term life insurance policy will pay enough funds to cover the new health insurance bill.
5. "I'm much too busy to worry about life insurance now."
It's simple to lose sight of the long term view when we are so consumed with dealing with our day to day lives. A rule of thumb is to plan that your kids will be "dependent" until age 25 due to college and finding a career. If your youngest is 10 today, you would want to have at minimum a 15 year policy to cover that risk period.
6. "It's too costly."
That is a huge oversight in thinking, as it is possible to find a policy that fits your needs and your price range. Today, term life insurance is much more affordable than permanent insurance, and is the perfect tool for handling your financial risk.
7. Bought it and forgot it.
Are you the same person now that you were 5 years ago? If we are candid the response is, "No." Maybe there have been some changes to your way of life such as getting married, having kids, buying a house, etc. These significant life events are exactly why you should assess your life insurance policy periodically to make sure that your policy covers your "new" situation.
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