When it comes to life insurance, it’s easy to make mistakes that could put your family’s
financial future at risk.
Waiting Too Long Costs You Money
One of the biggest mistakes is delaying getting coverage. It’s tempting to put it off, but
statistics show that premiums get more expensive as you age. What’s more, developing
conditions like heart disease, diabetes, or high blood pressure – all increasingly common in
older ages – can make qualifying for affordable coverage difficult or impossible.
The best approach? Get a policy when you’re young and healthy. Not only will your
premiums start off lower, but you’ll likely have an easier time qualifying for better rates.
Not Reading the Fine Print
It’s essential to take the time to read and understand your entire policy. Life insurance
contracts can be complex, with key information on what is and isn’t covered buried deep in the fine print. What’s more, associated fees and costs are sometimes hidden in
supplementary sales materials.
Fortunately, states mandate that insurers provide a “free look” period that generally ranges from 10 to 30 days. Use this window wisely – review all the terms and conditions carefully, follow up with questions, and ensure the coverage aligns with your needs and budget.
Dismissing Term Life Insurance
Many consumers think life insurance is too expensive. But term life policies are an affordable option providing temporary coverage worth considering. These plans last for a defined period, generally 10 to 30 years, and don’t build cash value. However, term life premiums are a fraction of permanent insurance costs.
For instance, a healthy 30-year-old may pay only $26 a month for a 20-year, $500,000 term life policy. Compare that to $440 a month for a similar permanent plan. For many families looking to pay off a mortgage or save for college, term life makes solid financial sense.
Counting On Policies for Retirement
Some influencers heavily promote using permanent life insurance to build wealth for
retirement. While these policies do accumulate tax-advantaged cash value you can access later, relying on them as a cornerstone of a retirement plan is very risky. The funds generated simply won’t be enough to finance decades of living expenses. There are far better options, like contributing to Roth IRAs, which allow tax-free withdrawals starting at age 59 ½.
The key? Work with a qualified insurance professional to determine the right policy to suit your family’s unique needs – one that provides protection without compromising other financial goals.