Common Mistakes in Buying Term Life Insurance Policies
9 out of every 1000 people will die in Canada this year.
That statistic sheds light on the fact that life is unpredictable. To help add some assurances to the volatile nature of life, many turn to term life insurance policies.
Term life insurance can provide holders with a variety of benefits. They can help replace income, help loved ones cover debts, cover expensive funeral costs, college funds and more.
Given the wide array of advantages life insurance brings to families, more and more people are looking into securing the best policy for their unique situation. Finding the right life insurance policy can cause some confusion however and this confusion can lead to costly errors.
To help you find the Best Term Life Insurance policy with ease, our team has put together this list of common mistakes people make when shopping so you can avoid them.
1. Not Buying the Correct Term Length
Term life insurance policies will cover you for a duration of time you specify.
While opting for a shorter term can save you money, it can also leave you without the help you need.
Imagine purchasing a 10-year life insurance policy term and experiencing medical issues when the term runs out. That may mean needing to opt into a much more expensive new policy or getting outright rejected for term life insurance.
To avoid blunders like this, make sure that you pick a term that's long enough to cover family members until they're independent.
For example, if you have a newborn child and want to make sure they're cared for until they're out of college, buying a 20-30 year policy can achieve that end.
2. Not Disclosing All Required Information
There are a variety of factors that can affect your term life insurance policy eligibility and price. Some seeking policies may be privy to those factors and attempt to withhold information that could raise their rate.
While this may net your short-term savings, in the long run, not disclosing all required information on an insurance form can be extremely costly. Insurance companies make a living by ensuring that they only pay out claims to people that are 100% eligible to receive them.
If you make a claim after paying your monthly premium for years and during your claim review an investigator figure out that a preexisting condition wasn't disclosed, you'll forfeit your claim and be removed from your insurance policy or be asked to pay a higher monthly premium.
Remember, insurance is only good if it provides you with peace of mind. Make sure you know you'll be covered by being honest on your application.
3. Not Purchasing Enough Coverage
The less coverage you buy the more you'll save. You should, however, make sure that you purchase enough coverage so the loss of your income won't impact your family's well being.
While there are many schools of thought on how much coverage to buy in term life insurance policies, try to at least purchase ten times your annual income.
This should give your spouse and children plenty of room to maintain their lifestyle as they try to put the pieces together from their loss.
4. Purchasing Coverage Too Late
When money is tight, people are always looking for ways to cut back. One of the main things that fall by the waist-side in these situations is purchasing term life insurance policies.
It's important to know though that the longer you wait, the longer your family will be at risk. You never know when adversity is going to strike and when it does, if you don't have a policy in place, you'll have no recourse.
Also, the younger you are when you buy your policy the cheaper it will be.
5. Not Looking at Many Providers
There are a lot of people willing to sell you life insurance coverage but not all of them are created equal. Some insurance sellers have a vested interest in selling you certain packages that might not be the absolute best fit for your needs. Others may be honest but charge more for policies than other providers.
To make sure that you're getting the best advice and price, it's important to shop for life insurance from multiple providers.
Doing so will let you compare and contrast what you're being offered and land on a policy that supports your needs.
6. Not Revising Their Policy Regularly
After you buy life insurance, you may think that the process is over. If you have great coverage and little has changed with your life then you may be right.
If life has brought with it new additions and challenges, however, you'll want to make sure your life insurance is still up to snuff.
For example, if you bought life insurance when you had one child and a cheap mortgage then your life insurance term and amount may not be adequate anymore if two years later you have an additional child and own more expensive property.
Always makes sure that your life insurance policy scales with your life circumstances.
Not revisiting and adjusting your coverage could mean being grossly underinsured when you need to make a claim.
Avoiding Mistakes When Buying Term Life Insurance Policies
Term life insurance policies can give you peace of mind that your loved ones will be taken care of if the unthinkable occurs. If you're not careful when buying a policy, you may end up overpaying or being underinsured.
To make sure you get the right policy for your situation, follow our tips above.
Buy term life insurance for the correct period of time, get a good coverage amount, disclose all information, buy sooner than later, shop multiple providers and revisit your coverage regularly.
Doing these things will further ensure your family's financial future when they're in desperate need of support.
If you're convinced that you need term life insurance, our team at Insurdinary can help. We compare and contrast the lowest cost term life insurance providers in Canada, the United States, and many other countries.
Get your free online life insurance quote today!