Life insurance is one of the most important financial decisions you’ll make. Avoid these common mistakes to ensure your family is properly protected.
1. Waiting Too Long to Buy
Life insurance premiums increase with age. A healthy 30-year-old pays significantly less than a 50-year-old for the same coverage. Lock in low rates while you’re young and healthy.
2. Buying Too Little Coverage
The general rule is 10-12 times your annual income, but your actual needs depend on:
Outstanding debts (mortgage, loans)
Future expenses (college for kids)
Income replacement needs
Final expenses
3. Only Relying on Employer Coverage
Employer-provided life insurance is a nice benefit, but it’s usually not enough. Plus, you lose it when you leave the job. Own a personal policy for portable, adequate coverage.
4. Not Comparing Quotes
Prices vary significantly between insurers. Get quotes from multiple companies to find the best rate for your situation.
5. Hiding Health Information
Never lie on your life insurance application. Misrepresentations can void your policy, leaving your family without benefits when they need them most.
6. Forgetting to Update Beneficiaries
Life changes—marriage, divorce, births, deaths. Review your beneficiary designations regularly to ensure the right people receive your benefits.
7. Choosing the Wrong Type of Policy
Term life is affordable and straightforward. Permanent policies offer lifetime coverage and cash value. Make sure the type matches your needs and budget.
Take Action
Review your current coverage and make sure you’re not making these mistakes. Your family’s financial security depends on it.
Not having enough coverage is the biggest mistake. Many people are underinsured—10-12x annual income is a starting guideline, but consider debts, childcare costs, and future expenses like college. Employer coverage alone is rarely sufficient.
▸Should I buy term or whole life insurance?
Term life is right for most people—it’s 5-10x cheaper and covers you when you need it most (while raising children, paying mortgage). Whole life may make sense for permanent needs like special needs dependents or estate planning.
▸Do I need life insurance if I'm single?
If no one depends on your income, you may not need life insurance. However, consider: co-signed debts (parents on student loans), final expenses, and locking in low rates while young and healthy for future needs.
▸How often should I review my life insurance?
Review life insurance after major life events: marriage, children, home purchase, divorce, or significant income changes. At minimum, review every 3-5 years. Your needs typically decrease as children grow and debts are paid off.
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