Even though most people don’t want to think about it, life insurance is crucial to any long-term family plan. No one plans to need life insurance and would much rather focus on the plans that they do have control over. However, when accidents happen, and you are no longer around, a life insurance policy that kicks in to help out can be life-changing for your family. Insurance is only as good as the terms and details of the policy, and we always recommend everyone stay up-to-date with knowledge of their life insurance. Today, we hope to inform you about some life insurance errors people make when receiving or re-upping their policies.
Life Insurance Errors To Avoid
There’s no reason to pay for life insurance if your family or beneficiaries can’t easily access the funds or don’t understand the plan. By avoiding these life insurance mistakes, you can ensure your family is well taken care of in the unfortunate event of an accident.
Mistake #1: Not Understanding Your Policy
Ideally, you should have a good understanding of any life insurance policy you have, but this isn’t the case for many people. As many people receive life insurance through an employer-based program, they don’t even have an option for specifics regarding their plan. One of the biggest mistakes people make is assuming their plan will pay out a large chunk of money no matter the circumstance. Always check the amount of coverage you have and make a determination about whether or not it is enough to keep your family afloat during hard times. A common rule of thumb is anywhere between 10 to 20 years of yearly salary as life insurance coverage, but you might opt for more depending on your financial and family situations.
Mistake #2: Keeping Your Plan Hidden
As death is an uncomfortable topic to discuss with loved ones, many people are afraid to talk specifics about their plans or inform their families about the policy. However, this will only complicate the insurance process and negatively impact your family should something happen to you. Take the time to inform your beneficiary and accurately describe the plan, giving them any relevant info that would be helpful in starting the claims process and receiving support.
Mistake #3: Beneficiary Mistakes
Life insurance is usually on the mind of people with close family members – a spouse or minor child – that want to ensure they are taken care of. However, your beneficiary should always be someone who can readily access the funds or file a claim. If you don’t name a beneficiary, a lengthy court process would have to concldue before anyone gets paid. Similarly, if you leave behind a child without a guardian, a court process to determine guardianship is mandatory before anyone can file a claim on their behalf.
Mistake #4: Procrastinating
Not only is putting off getting life insurance gambling with the future financial security of your family, but it is also a costly mistake. Young, healthy adults can receive life insurance policies at lower rates compared to older people with existing health complications. Many people begin considering life insurance after the birth of their first child. At this age, most parents still qualify for fantastic coverage at low monthly rates.
Life insurance shouldn’t be a taboo topic; it is a crucial part of a complete financial plan. Even if you have life insurance, you should routinely look for possible coverage upgrades or cost reductions.
The best way to avoid life insurance pitfalls is to speak with experts. Our team has decades of experience helping countless people find plans that fit their situations. Call Anderson & Associates Insurance Group today for a consultation.
