Life insurance is an important part of managing your family’s future, and you don’t want to mess it up with a stupid mistake. Here are five common mistakes that can really impact your life insurance purchase. Avoid them.
1. Don’t lie on your application
It may be tempting to give some misleading answers on your application in order to try and get a better rate or avoid an issue. One of the most common is to forget to mention a pre-existing medical condition. The worst is to lie about tobacco use. People know these things can affect their insurance rates and so they try to fudge. Don’t.
Life insurance companies often ask for documentation to back up your medical history, so you can be easily found out. If you lied you’ll be denied coverage. And in the event of a claim, those things will be investigated and a lie will invalidate your claim. You’ll be putting your family’s entire security at risk by lying on your life insurance application. It’s not worth it.
2. Don’t wait to buy until you’re older
Life insurance rates are based partially on age. Fact is, the older you get, the closer you are to the last tick of the old heart. So don’t wait until you’re older, because that will increase the cost of insurance. Your best strategy is to apply for insurance while you are young and healthy and qualify for the best rates.
You never know how your health will change, either. From one day to the next, you could suddenly find out about a medical issue that will make a huge impact on your ability to buy life insurance, or its cost. The best time to buy is right now, when you know everything is going great.
3. Don’t visit your doctor right before the insurance medical exam
Chances are you’ll need a medical exam to get the best life insurance deal. But it isn’t in your best interest to see a doctor just before you need to. Why? Because if a problem happens to show up, even something that doesn’t seem important, the life insurance company will learn about it when they review your medical records.
Don’t avoid your regular checkups or treatment. But don’t schedule one just before your required insurance medical either.
And avoid trying to rush into a big diet just before buying your life insurance. That can also affect your health, or it might take longer than you think and you’ll find yourself putting off the coverage and keeping your family unprotected. After you have your insurance, you can lose weight and look into asking for a rate reclassification later on.
4. Don’t purchase too little insurance
Far too many people have inadequate life insurance. What good will it do if your insurance payout barely covers the cost of the funeral? Or worse, if it doesn’t even cover that. Have you looked into what costs are involved in just those final arrangements? It might surprise you! You want to make sure that the insurance is sufficient to cover your debts and the income your family will lose from your passing. Think about your retirement pension and other things that your employer may be contributing to. Those will disappear as well once you’re gone. Sit down and calculate everything your family will need for the next 15-20 years. Then buy enough to see them through.
5. Don’t plan an exotic vacation right now
One of the questions you’ll be asked on your application is if you plan to travel. You might run into trouble if you’re deep into your travel plans, especially if going to locations that are known hot spots or trouble areas. So just put off your travel plans after you get your insurance. Exciting or exotic trips should wait for at least two years after your insurance is completed.
Your life insurance policy is all about protecting your family from financial ruin should something happen to you. Make sure you have enough coverage, and get it now, before complications can happen and make it more difficult.