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7 Common Life Insurance Mistakes To Avoid


Chances are your life insurance needs will change over the lifetime of your policy. Milestones like marriage, divorce, having children, changing jobs, and moving into a new home can have a profound effect on how much coverage you need. – PowerPoint PPT presentation

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Title: 7 Common Life Insurance Mistakes To Avoid

Life Insurance
Common Life Insurance Mistakes To Avoid
  • According to a Bank rate Money Pulse survey from
    June 2015, nearly 50 percent of households dont
    have any life insurance to speak of. Among those
    who do have it, nearly half are underinsured.

The survey also notes that many policyholders
dont understand how much life insurance they
need or how much they should be paying, which can
lead to serious mistakes during the buying
process. Here are seven of the most common
mistakes to avoid before, during and after you
buy a life insurance policy.
  • Being less than honest on your application. It
    can be tempting to provide misleading personal
    information on your application to try and
    receive a better premium. However, doing so could
    put your familys financial security at risk.
    Its important to be completely honest on your
    application, because false information can lead
    to inaccurate quotes and, even worse, grounds for
    a life insurance company to deny a claim.
  •  Procrastinating. The younger you are and the
    better your health, the more affordable your life
    insurance premiums are likely to be. As you age
    and become more susceptible to medical conditions
    and lifestyle- or work-related accidents, your
    life insurance rates will only increase. Thats
    why waiting until you are older to buy a policy
    can harm you and your family.

  • Miscalculating your coverage amount. Failing to
    purchase an adequate amount of life insurance
    coverage can severely compromise your familys
    financial future in the event of your passing.
    Thats why it is so important to take the time to
    calculate how much your dependents would actually
    need to cover ongoing expenses such as food,
    clothing, mortgage payments, debts, education,
    and healthcare.
  • Relying solely on group life insurance. An
    ancillary mistake to miscalculating your coverage
    amount is relying solely on a group life
    insurance policy. While group life insurance is a
    wonderful employee benefit, the coverage amounts
    that most employers provide arent enough to
    protect your family for more than a year or two.
    Moreover, most group life insurance policies
    terminate if and when you leave the company.
    Thats why it pays to have an individual life
    insurance policy, which will protect your
    dependents for as long as you pay your premiums.

  • Failing to properly designate a
    beneficiary. Beneficiary designation is a crucial
    and often overlooked aspect of buying a life
    insurance policy. Naming a minor or your estate
    as a beneficiary can lead to delays in claims
    processing, not to mention attorney fees, court
    costs and interference from creditors. Forgetting
    to update your beneficiary designations after
    major life events like marriage, divorce or
    having a baby can also threaten the financial
    security of those you leave behind. Thats why
    its a good idea to consult with an attorney who
    is familiar with wills, trusts and estate taxes
    before designating a beneficiary for your life
    insurance policy.
  • Forgetting to update your policy. Chances are
    your life insurance needs will change over the
    lifetime of your policy. Milestones like
    marriage, divorce, having children, changing
    jobs, and moving into a new home can have a
    profound effect on how much coverage you need.
    Typically, a family with young children will
    require more coverage than a retired couple whose
    children have long since left the nest. To
    prevent overspending and ensure your family is
    adequately protected, take the time to
    periodically reassess your life insurance needs.

  • Buying a policy without shopping around. Your
    premium for the same amount of coverage can vary
    by hundreds of rupees depending on the life
    insurance company you choose. Thats why its so
    important to comparison shop multiple insurance
    companies to find the right policy at the best
    price for you.
  • Source http//www.selectquote.com/blog/2016/01/21

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