Tuesday, 8 April 2014

Life Insurance 101: Common Mistakes when Purchasing a Life Insurance Package (and How to Avoid Them)

One of the wisest things that you can do as an adult is to invest in a life insurance policy. However, there are certain commonplace mistakes that people commit when they do so, thus jeopardizing their chance to maximize their insurance benefits.

policies that do not require medical examination

Here are some of the most common mistakes that people unknowingly commit when they sign up for a life insurance package. Go through the following items before you buy a policy and see to it that you avoid making the same mishaps.

Using your Children as Main Beneficiaries

While it is normal for parents to secure their children’s future, you should make sure that you do not name an underage child as your primary beneficiary. Children usually lack the mental and emotional maturity that is required to be responsible in using insurance benefits. In case of a parent’s untimely passing, a child is usually left with benefits that he does not know how to utilize. To be on the safe side, name as adult as your main beneficiary. Use your spouse or your closest adult relative. This way, if something unfortunate happens, you will be able to ensure that your whole family, even your youngest child, will be well taken care of.

Buying Medically Underwritten Insurance

People often take a shortcut and buy life insurance policies that do not require medical examination. While it will surely be easier to purchase a medically underwritten policy, doing so will limit the benefits that your beneficiaries will receive is you pass on unexpectedly. Insurance policies that do not require medical certificates are also usually more expensive. Take the right route and buy a policy that will detail and cover any existing condition that you might have. Undergo medical examination if required. This will give you peace of mind in knowing that all of your future health expenses will be covered by your policy. Doing so will also be more affordable and more worth it in the long run.

Signing without Reading the Fine Print

As a rule, you should carefully read through any piece of document before you sign the dotted line. While this rule sounds simple, there are people who purchase life insurance policies without reading the fine print. Protect yourself and your family by carefully reading through all the provisions of your policy. If you notice that something is amiss, then talk to your insurance agent and try to negotiate your terms.

Submitting an Application without Reviewing It

People often make the mistake of buying a life insurance policy without reading over their insurance application prior to submission. As a result, they need to go through an arduous process of re-filling and policy adjustment, just so they can ensure that their families and loved ones will be able to maximize the benefits of their life plan.

Keep yourself from going through the same ordeal by reviewing your application before handing it over to your agent. Make sure that every letter is in place. A quick read-through may just save you from having to re-negotiate your life insurance benefits and beneficiaries.