5 Common Mistakes When Choosing Term Life Insurance

Cash value life insurance is not as great as you'd imagine. We are not too enthusiastic about this life insurance so we cannot recommend it to anyone. 

In matters of insurance always go for term life insurance over complete life insurance. In making this choice however, you need to avoid the following common mistakes. 

These are 5 of the most common mistakes people make when picking out life term insurance. 

Getting Started.

1. Coming short in value.

It is advisable to purchase at least 10 to 12 times of your total income for any life insurance coverage. A lot of times people buy into policies that are nowhere bear enough. 

If you're the primary breadwinner in your family then you need to invest in a policy that is guaranteed to take care of your wife and kids for many years after you're gone. Good coverage will allow your family live a comfortable life and give them adequate time to find their feet.

It is also very important that both spouses purchase insurance coverages even if they are both stay at home parents.

1. Delaying Coverage 

Delay is dangerous and if you procrastinate when it comes to buying coverage you are putting your family in a very vulnerable position. Life can be very unpredictable and things happen unexpectedly. You need to be prepared. Also time life insurance premiums naturally go higher the older you are as there are more health risks associated with age. Buy one now.

1. Buying Too short duration 

A lot of people fall into the trap of buying a shorter term coverage with the aim of saving a few dollars. What people fail to consider is the dangers of buying say a 10 year policy and ending up with medical issues in that time that will drive up the cost of your next plan. In more severe situations some people are even ineligible for any more coverage. You end up losing in the long run.

Generally you should buy a plan long enough at least up till the time your kids go off to college and can fend for themselves as little they can. So if you don't already have kids and you hope to, you should buy a 30 year plan. If you already have little ones running around a shorter 20 year plan will do.

1. Buying too many ad ons.

Stay away from policy riders that end up increasing your premium and you end up paying out unnecessary commissions to your agents with little or no value in return.

Some of the more common add ons include income replacement, acute illness, accidents and waiver of premium. These add ons sound good to take on but they offer very little benefits.

1. Failure to review policy.

It is imperative that you occasionally have a close look at your policy as time goes on. This will ensure that your policy is still offering exactly what your current needs are. You might have had an excellent coverage a decade ago but so much changes in that time and it might no longer cut it today.

Your insurance policy must also align with your current requirements and as such must be constantly monitors and reviewed. When your life changes positively say you get a raise at work, get better physically etc. you might want to revisit your coverage. Similarly with negative life changes you might want to get additional coverage.

Life insurance is a critical part of your financial plan and it shouldn't be taken lightly. Do the needful today and protect the future of your dependents.