Have You Made These Life Insurance Mistakes?
It’s easy to neglect this cornerstone of your family’s financial health. Don’t make that mistake. While 81% of North Americans say they need life insurance, only 41% own an individually purchased policy. Do any of these other mistakes sound familiar? Have you made these life insurance mistakes?
Mistake #1 Putting it off. There’s no doubt about is: the topic of life insurance is an emotional issue. Therefore, it can be easy to put off. However, if someone depends on you financially, it’s crucial that you obtain the right amount of life insurance coverage for your family. Talking to someone you are comfortable with – (like me) – can help.
Mistake #2 Relying on your company – provided plan. Many workplaces offer an employer-paid basic life insurance benefit, usually equal to one or two times your annual salary. Unfortunately, this is usually not enough. And, what happens if you change a job – or lose your job? Not all policies are portable, and there’s no guarantee your employer will provide this benefit.
Mistake #3 Thinking you can’t afford it. Term life insurance rates are lower than you might expect. “If you need to buy more, term is almost always your best choice. Compared with a whole life policy, you can purchase more coverage for fewer dollars, and rates have been dropping steadily in recent years.” Money, March 2008
Mistake #4 Not buying enough coverage. How much do you need? That depends on the individual. However, many financial experts recommend the following rule of thumb: purchase an amount of coverage equal to six to 10 times your annual gross income. If you’re still unsure, ask your financial advisor to help determinate the amount that’s right for your family.
Mistake #5 Not reviewing your coverage. Financial experts recommend reviewing your coverage every few years, or when changes occur, such as buying a house or having more children. When was the last time you reviewed your coverage amount? If it’s been more than two years chances are you could benefit from a review.
Why do I focus this much on life insurance? In the last 2 years I grieved the loss of few dear people. I lost my little daughter, then my father-in-law. Then two great friends died suddenly: both healthy, successful in their business, with great marriage, loving family. One of them at age 54, just didn’t felt well one Sunday evening (flue like symptoms) and the wife took him to emergency room – turned out he had acute leukemia – after a year battling the disease – he passed away. The other friend after three weeks of turning fifty, he and his lovely family had a family day at a lake. As he was swim racing with his 12 years old son to the deck, he had a massive hearth attack and drowned. Both healthy, the first a successful real-estate broker, the second owned his photocopier business. Both active, healthy and in a matter of 6 weeks I had to see my girlfriends saying good-bye for their love, partner and some amazing kids will never be able to call their daddy. Amazing people whom will be greatly missed. My hearth is just broken that they are gone, but I know that their family will not have to suffer financial hardship over and above the pain they have to go through
Do you think they ever thought that they will need life insurance? No, you buy life insurance for “just in case” instances and hope that you’ll never need to use them. Both families had coverage, so now, that tragedy hit them, it’s enough to deal with the emotional fact, their financial situation was taken care of, before problems arrived.
We don’t plan these events. We can’t even comprehend the pain a family goes through when they lose a loved one, but worst then that is not having life insurance. If you have family and you love them, don’t just tell them, make sure you talk with a financial specialist to find out how much insurance you really need, so in case something happens your loved ones are covered.
For a FREE personal financial evaluation please contact me. Please make sure you don’t make the above mentioned insurance mistakes. It’s all about your family, your kids and loved ones future. Do you love them? If yes, than make sure they are protected even when your not around.
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