Though it may not be high on the list of priorities of many people when starting a family, having a life insurance policy is very important. It is very confusing for many since you do have to make sure that you choose the right policy for your needs and budget. But, there is more to it than that.
Picking the wrong policy or making a number of other mistakes can leave you in a bad position. In fact, some mistakes are big enough that you may need to hire a life insurance lawyer to help you.
In this article, we will go over some common mistakes people can make with life insurance so you can avoid doing the same.
1 – You didn’t shop around
You may feel like getting the same policy with the same coverage is going to cost the same no matter what company you go with. Unfortunately, this is not true. There are so many variables that go into the quote that make it vary wildly from company to company.
This means that shopping around is essential. Try to go with a few different life insurance companies and see who is going to give you the best quote. Not only will you be able to find a deal, but you may also find that you can get better coverage than you had planned to get for around the same price by going with a different provider.
2 – Naming the wrong beneficiary
There is usually a good reason to name certain people or things as a beneficiary. Loved ones that happen to be minors, for example. Or, you may even want to name your estate as beneficiary. However, these are serious mistakes to avoid.
Starting with the mistake of naming an estate, the reason this is a bad idea is that it puts your estate beneficiaries in a bind in the event of your death. It can take a long time to get through the probate court which leaves them without the benefits.
Naming a minor as a beneficiary gets very complicated and expensive if you are deceased before they reach adulthood. If there is a dispute over who should be the legal guardian then this can delay the payment from the policy and cost a lot of money in lawyer and court fees.
3 – You fail to keep it updated
Things change over time as life goes on. What was seemingly set in stone a decade ago may have evolved and looks quite different today.
You will have to keep your policy updated as things in your life change to avoid any problems later. For instance, you may be divorced and will need to change your beneficiary. Or, you could find that the policy you thought provided enough coverage no longer does now according to your circumstances.
Review your policy periodically so you can be sure that there are no discrepancies that could cause a headache further down the road.