Avoid These Mistakes When Buying Life Insurance

Life insurance policies can be essential to you and your family in the event of a catastrophic event. It can be extremely difficult to choose the right policy or select the correct amount of coverage for your family. However, if you follow these guidelines to avoiding ten simple mistakes people make when buying life insurance policies, you will find that it is not so difficult to purchase a good life insurance policy.

Do not assume that the primary breadwinner is the only one with value.

Many people pick their insurance policy coverage based on what will replace the primary income, especially if one spouse does not work. However, it can be difficult to place a monetary or budgetary value on what a non-working spouse does for the household. This includes general household upkeep, organization, domestic tasks, and childcare. It is generally estimated that if you factor all of these things in an additional $100,000 a year minimum is needed to replace that spouse’s contributions.

Do not rely strictly on employer coverage.

“Benefits” can go a long way, particularly for medical coverage. However, life insurance policies offered through your employer are rarely personalized, and are therefore less effective than going through an agent and shopping for your own policy. Employer coverage will only cover you, if that. If you have a family or additional expenses, such as debt or a mortgage, you may want to shop around for supplemental insurance or third party term life insurance policies.

Do not think that families are the only ones who need insurance.

Many young adults and singles fall into the assumption that if one does not have children; one does not need to think about life insurance. This simply is not true. If you have debt, such as a mortgage, think about life insurance to tie up any loose ends you may leave behind. Also, if you have elderly parents or siblings you are close to, or a charity organization you would like to leave a legacy to, consider a life insurance policy. The fact of the matter is cheap life insurance is easily attainable.

Do not assume that price is the only way to shop for the best deal on life insurance.

Just because your life insurance is cheap doesn’t mean it’s the best deal. When you are shopping for insurance, you need to take into account what you would like to wrap up, provide for, or pay off. You also need to consider what health problems run in your family that may come up as potential issues. Find a life insurance policy that fits your needs well, rather than simply being the cheapest life insurance policy you can find.

Do not let your life insurance policy lapse.

When you get a new life insurance policy, you will generally have to undergo a physical. Things that tend to crop up as you age, such as high cholesterol and blood pressure, can negatively affect your rate. Even if you do have a good rate now, should you let your policy lapse you may have to submit to a new physical exam, which could increase your rate. Letting your life insurance policy lapse could cost you hundreds (maybe thousands) of dollars over the years, so you definitely want to avoid this.

These are just sample of the life insurance buying mistakes you should avoid in the process. Buying life insurance shouldn’t be that difficult, but as you can see there are important things to consider.

By High Yield Savings Accounts

The founder and editor of with a passion for personal finance and experience in the financial industry.