When it comes to term life insurance, you may think that you’re doing everything right. However, some people might be making insurance mistakes without even realizing so.
Whether it’s an error in your coverage or an oversight on paying your premiums, these mistakes can cost you big time when you need coverage the most. In this article, we’ll go over some of the most common term life insurance mistakes and how to avoid them before they become problems that could have been avoided easily had you planned your life events in advance!
What is Life Insurance?
Life insurance is a contract between you and an insurance company that pays out a sum of money upon your death. It helps provide for your family’s future.
The amount you pay in term life insurance monthly premiums is called the annual premium. The larger the annual premium, the greater the death benefit offered by the policy.
1. No Life Insurance
People are often advised to get term insurance benefits when they have dependents, but this isn’t always the best course of action.
If you don’t want the kids or spouse to be left with debt, for example, you can instead set up a trust that will pay off any debts and provide for your family’s needs.
Plus, some people opt not to buy life insurance because they don’t like the idea of spending money on something that may never happen. But there are other ways to protect your loved ones financially in case you die too soon.
2. Only Buying the Minimum
Insurance can be complicated, but it doesn’t have to be. Buying a minimum amount is usually a waste of money because you need different policies for different types of risks.
You need liability insurance on your car, home insurance if you own a home, and health insurance if you go to the doctor or hospital.
But once your needs are met, don’t stop there! Think about what other things might go wrong in your life – say your car is totaled by someone else or you get hurt at work. Those are covered separately by different types of insurance that will protect you from paying out-of-pocket for a big expense.
3. Buying The Wrong Type of Policy
If you have health insurance through your employer, are at a certain age, and have no pre-existing conditions, then you’re probably in the clear.
But if your plan doesn’t cover everything you need it to or has a high deductible, it might be time to shop around. Often there are better options out there for people with certain needs. And if not, there’s always the option of getting a high-deductible policy along with an HSA account that can help offset some of the costs.
Ways to Save Smarter for Changing Life Goals Using Term Insurance
The best way to save for changing life goals depends on the goal. In most cases, the term insurance benefits involve using term insurance to reduce taxes and finance future changes at the same time. If you’re not familiar with these strategies, here’s an introduction to three ways of saving smarter with term insurance that can help you achieve almost any goal – whether it’s funding your child’s college education or making sure your family is okay if you pass away unexpectedly.
Saving Smart For A Better Future
Term insurance benefits are a great way to protect your family’s future even if you’re not sure how life will turn out. Having your family financially secured in case of a mishap is a blessing in disguise.
Key Takeaways
Most people are so focused on paying the bills, term insurance benefits and managing day-to-day expenses that they don’t think about what might happen down the road. There are several different types of life insurance policies available to meet different needs.
For example, you can purchase a policy that will provide money for a spouse in the event of death or one that pays off debt such as mortgages or student loans in case of death or disability.
A Special Offer
The Return of Premium (ROP) option is available under the iSelect Smart360 Term Plan by Canara HSBC Life Insurance Company Limited.
Under this option, in case the insured person outlives the policy term, the sum assured on maturity will be paid to the policyholder which would be 100% of the total premiums paid, excluding taxes and underwriting extra premiums, if any.
Conclusion
Having term life insurance coverage is one of the most important things you can do to protect your family, your assets, and your future income streams from life’s uncertainties. But in case you opt for more than one insurance policy around the same time, things can get complicated—and if you’re not careful, you could find yourself making mistakes with some of the policies that will cost you money in the long run.
These are 3 common insurance mistakes that people tend to make and how to fix them so that you can keep your family’s finances secure.
