Purchasing life insurance can seem a bit daunting for individuals who are not fully aware of the options available to them. To this point, without the direction of an agent that is empathetic and aware of their current and future needs for life insurance, there are several pitfalls that consumers could fall victim to. PHP Agency realizes that becoming educated on some of the common mistakes that people make when exploring coverage options is important to ensure that we make the best decisions possible. Here, PHP Agency reviews a few of these mistakes and how potential consumers can best avoid them.
Waiting Too Long to Explore Options
Many people hold the misconception that life insurance is prohibitively expensive to purchase. This means that they may put off buying the coverage that they need. It is important to note that life insurance premiums are based on factors such as age and overall health and buying a life insurance policy while you are younger can help you secure a policy at a low cost. Those that wait to buy may find that their premiums are higher, as life insurance rates typically increase as people age and their health deteriorates over time.
Not Shopping Around for Rates and Policies
Prices in the life insurance space can vary widely depending on the level of coverage and what the options include, and consumers should certainly not limit their search to just one company. One company’s term insurance product could easily be more than double a competitor’s, and that does not mean that the higher priced coverage is inherently better or more fit to your situation. To get the best deal possible for your needs, it is recommended to shop around and hear from at least three companies for different coverage levels before deciding.
Purchasing Too Little Coverage
Not buying enough coverage is a common mistake in the life insurance space because some families underestimate their needs for insurance. After all, it takes a large death benefit to replace a breadwinner’s monthly income if their paychecks were to stop rolling in. It is recommended to ensure that your policy covers your lost income as well as potential bills such as funeral costs, the mortgage, education, and other expenses that you anticipate over the course of your children’s lives. By balancing comparing your current assets with your financial obligations, you can decide how much coverage will be needed to fill in the gap.
Buying the Wrong Type of Coverage
PHP Agency speaks to how each of us have individual needs for life insurance and there is no “one size fits all” option that can cover us all. For this reason, it is important that individuals purchasing life insurance fully understand the policies they are looking at. What does it cover? What does it not? How much are you required to pay? It is crucial to know the answers to all these questions and more early in the conversation. Even if you have the help of an agent to decide which policies would best fit your needs, you will need to remember that your needs may still change over the years. After significant life events that may change your insurance needs, go back and reassess if your current policy will still work for you.