If you’ve decided to purchase life insurance (or you’re already covered), congratulations! One in five households with kids under the age of 18 have no life insurance, and life insurance remains the best way to protect your loved ones once you’ve passed on.
Unfortunately, deciding to purchase life insurance isn’t enough. Consumers need to remain educated about their rights and responsibilities, and there are a few things you can do to ruin your life insurance coverage:
1. Waiting too Long
While you may be intending to purchase life insurance in the future, life can easily get in the way. And as you age and your health deteriorates you may end up ineligible for coverage or paying much more than you would pay otherwise.
As soon as you have dependents relying on you, you should go ahead and purchase your insurance. This will give you the best chance of purchasing a policy that’s low-cost since you’ll be relatively young and healthy.
2. Not Purchasing Enough
Of the parents of young kids that do have life insurance, 50% have less than $100,000 worth of coverage. This is a common mistake and can be devastating when you’ve paid for insurance for years and assume your family will be taken care of once you’re gone.
Luckily, this is one problem that can be easy to fix due to low-term policy rates. Spend some time analysing your life insurance needs. You’ll need to cover any large debts like your mortgage, replace your income so your family don’t face a decrease in lifestyle, and cover your funeral expenses.
It’s much easier to get this sorted while you’re still healthy than it is years down the track when you realize you and your family are underinsured.
3. Forgetting to Review your Medical Records
Before purchasing your insurance, it’s a good idea to ask your doctor for a copy of your medical records. Since your insurer will also get a copy of your records and will use them to determine your rates based on your medical history and risk, you need to check that they’re accurate.
This is particularly important if you’ll be getting life insurance without exam as your insurer will be looking solely at your age and medical records.
It’s not uncommon to find that your medical records have errors in them which could potentially cost you much more in insurance payments.
4. Missing Payments
Many people are unaware that missing a payment on your life insurance can impact your policy benefits. Some may even be sensitive to the timing of your payments, and if you miss your monthly payment or pay more than a month late, your policy may no longer be guaranteed.
Your insurance provider may even reduce the age you’re provided to- even if you have guaranteed coverage to a certain age. If you think you’re going to miss a payment or may be paying it late, it’s crucial that you get in touch with your company as soon as you can.
With term life insurance, you could completely lose your policy if you don’t make all of your required premium payments.
Communication is key here. Many insurance companies will give you 30 to 60 days to catch up on payments before they change your policy’s guarantee.