Buying life insurance is a selfless act. But despite your best intentions, choosing a policy can be difficult. If you don’t know what you are looking for and the differences between the different policy types, you could inadvertently create a financial nightmare for those you were trying to help! The experts at RoseMark Advisors have put together a list of the most common pitfalls when shopping for life insurance.
- Choosing the wrong kind of insurance
There are two basic types of life insurance: term and permanent. Term policies provide protection for a specific period of time (term). Common term policies provide coverage for 20 years, but they can run for longer or shorter terms. Term life insurance is meant for temporary coverage (like when your kids are in college or while you are paying off debt). It typically offers the most coverage for the lowest premium.
Permanent life insurance provides lifelong protection. Permanent policies pay a specified sum upon the death of the insured, regardless of when the death occurs. These policies also accumulate cash surrender value. This means you can surrender or terminate the policy prior to death and receive any cash value that may have accumulated to that point.
When deciding between term and permanent insurance, you should think about what you are trying to accomplish. Funeral expenses? Offset loss of income? Help with future education costs? If you are unsure as to which type of insurance is best for you, speak with a financial advisor before buying anything. (RoseMark Advisors can help and is a FREE benefit to all AMAC members!)
2. Guessing at how much coverage you need
Now that you know what type of insurance you’d like, how much coverage do you need? Deciding on the amount of death benefit involves several factors: age, health, life expectancy, income, debt, and total assets. Remember that when you die, the paychecks stop but the bills don’t. For most people, their coverage need is often 10 or 15 times their gross annual income or more. There are many online calculators to help you assess your coverage need, but there’s no substitute for discussing it with a qualified insurance professional.
3. Not shopping around
As you would with any important purchase, you will need to shop around and compare rates. Be sure you are comparing apples to apples and providing consistent information to each company you are asking for a quote. This will ensure that you are getting the most accurate rate information for the coverage you seek.
4. Focusing only on the cost
It’s not unusual while shopping for insurance to experience some sticker shock. At that moment, you may feel that it’s an unnecessary expense. It’s not. The cost of not having life insurance can well exceed what you’ll pay for the peace of mind knowing your family will not struggle in your absence.
5. Waiting too long
You should always buy life insurance sooner rather than later. The amount you pay in premium is based on both health and age. Once you purchase a policy, be sure to review it regularly to ensure it still fits your needs. Call RoseMark Advisors any time for a quick review, whether you purchased it from us or not.
If you wish to speak to one of our financial advisors, please give us a call at 888-355-1668
or click below to request a call.
What is the best policy to have for 55 couples?
When it comes down to the best policies, a Guaranteed Whole Life policy would always be the best option – if money is no option. Your insurance will continue as long as you pay the premiums and your beneficiary will receive the total benefit tax-free. If you have additional questions, feel free to give us a call at 888-355-1668.
In your “5 mistakes “ advice column you say that people should buy life insurance at an early age to get a lower price.
Doesn’t the price increase every few years? At age 60, wouldn’t I be paying the same monthly rate whether I was a new customer or 20 years into a policy?
RoseMark Advisors would only advise purchasing a level-premium policy. That means once you purchase a policy, the monthly premium will remain the same for the remainder of the term. It will not increase annually. If you would like to discuss life insurance further or have any questions, please give us a call at 888-355-1668.
I am recently retired and I no longer have life insurance for myself (57) my husband (61) or our son (18). Please contact me via email to discuss purchasing policies for my husband and I, and possibly our son as well.