Common Mistakes to Sidestep With Your Life Insurance
While life insurance is most certainly one of the most essential policies you can add to your coverage portfolio, having it doesn’t do you much good if you don’t know the proper way to use it. While local insurance agents can most certainly help you understand how to get the most out of your policy, there are some mistakes of which you should be aware to avoid ruining your life insurance policy and the coverage it provides.
Buying the Cheapest Policy
Generic brands aren’t always a horrible choice, but putting the entirety of your focus on saving money with the cheapest policy is sure to result in regret. The least expensive policy could have restrictions that limit your options later should you decide to change your policy when you’re older. There’s also the fact that your conversion option may not be as agreeable if you select the least expensive coverage. Rather than look at what you’re paying, pay attention to what you’re getting on your policy and the peace of mind it provides.
Waiting Too Late to Get Life Insurance
Don’t think that life insurance is only for those who are married or have dependents. Even if you’re single and don’t have anyone depending on you and your income, you can still benefit from having life insurance, and that’s especially true if you leave unpaid debts or don’t have money saved up for the cost of a burial and funeral. By getting life insurance early when you’re in good health, you can take advantage of lower costs. There’s also the fact that you might not even qualify for the policy you want if you wait until you’re older, mainly because of health conditions common to the elderly community.
Mismanaging Your Payments
No matter your financial situation, do your best to take care of your life insurance policy first, or at least work something out with your insurance agent so you can maintain your policy. A single late payment on a universal life policy with secondary guarantees can come with grave consequences for your benefits. If you think there’s even a chance you might miss a monthly policy payment, contact your agent to see if you have a 30- or 60-day grace period while you get things figured out.
Taking Money Out of Your Policy
If you have a permanent life policy, it has a cash value, one you might be tempted to use for times when money is tight. While you can take out a loan or withdrawal from your policy without worry of being taxed, you’ll want to use the utmost caution when doing so. The reason for this is you can deplete your policy, which will result in you having to pay taxes. Always consult with an accountant or tax expert before you take out even a cent from your policy.
Maintain your life policy and your financial sanity by avoiding these life insurance mistakes. Understand how your policy works, and don’t be afraid to speak with your insurance agent about making changes to your policy if you feel it’s necessary.