The 5 Worst Insurance Mistakes We All Make
When Buying Life INSURANCE

Most of us have at least thought about the idea of purchasing life insurance. There are many reasons and benefits for buying life insurance. But for some it becomes a great endeavor of shopping prices, agents, companies and plan types. For others the idea of life insurance is very scary and daunting. What ever your path, there will come a point in time when you simply have to dive in and get serious about obtaining life insurance. The alternative, continuing to do nothing, is an option that you realistically don’t have. My hope is impart wisdom to help others avoid the most common Life Insurance Mistakes that lead consumers to making poor choices. Because all to often wisdom comes through making bad choices and only discovered or realized after its too late to benefit from it.

#1 Life Insurance Mistake:
Not using the correct products to solve your needs!

It can be quite overwhelming to understand life insurance and even more challenging to select which product is better. Let me start by removing the myth that any product is better than another per say, it’s really more about how and what your needs are as to which program/product is best for you. I would suggest simplifying to start and ask your self a few questions before beginning your search:

• What is my real need for Life Insurance?
• Is my need temporary like a mortgage, debt, providing for young children or income loss
• Is my need more permanent like pension replacement, long term debt into retirement years, special needs family member care, business buyout

While there are many different products, they usually fall under one of those two classifications, temporary or permanent. Understanding these differences is the first step in avoiding life insurance mistakes.

#2 Mistake:
Playing the waiting game.

We all seem to be guilty of this mistake to one degree or another. We want to make sure we get the best rate when we look for life insurance. So, we think a good place to begin the process is by starting to eat healthier, losing weight, stop smoking… Unfortunately, time doesn’t stop while you try to make this health transformation. Your age continues to increase. Since age is certainly one of the largest contributors to life insurance premiums, delaying just pushes the cost higher.

Additional factors and new obligations also change as you delay. You have children and take on new long term debt, like a new home mortgage or business adventure. You have to consider if tomorrow was the day it all went wrong, what would your spouse or partner do? Could they still meet the mortgage payment, could they handle raising the children and working with no savings? All tough questions for sure, and all could be solved if you don’t put it off for a “better rate”!

Today is the day to act on obtaining life insurance. You can’t change your age or need. But many insurance companies will allow you to improve your life insurance health rating down the road. Your premiums can be reduced if you make positive changes to your health. Like gradual weight loss, quitting smoking, and reducing high blood pressure or cholesterol. So if you improve your health in a significant way, companies will reassess your premiums. So don’t fall into the trap of waiting and avoid these life insurance mistakes.

#3 Mistake:
Not understanding how layering works.

While there are many ways to calculate your amount of coverage needed, pay off major debt, loss of income multiplied to age 65, goal completion like college, home purchase, retirement. One thing never gets any easier, affordability!

Layering coverage is more work for the agent but it makes the most sense when factoring in needs vs. budget. Here is how it works, certain needs may be much shorter like children ages 8 -15 for example, if the goal was to get them to where they were reasonable self sufficient say age 20, a 10 or 15 year level term may do just the trick and the less years guaranteed, the less the premium will be. For something like a 30 year mortgage you would probably consider a 30 year term, and again, longer guaranteed length term means a higher premium. So if you layer in coverage’s to meet actual needs instead of just one 30 year term for everything you could save 50% or more and still solve all your needs. That’s a strategy that many consumers are unaware of and leads to common life insurance mistakes.

#4 Mistake:
Not all permanent insurance is guaranteed till death.

If you want or need permanent insurance then don’t get bamboozled by a quick talking agent that sells you on how life insurance is the greatest investment ever by showing you a program based on “hypothetical” performance without guarantees to the age you need. Many Variable and Index products don’t provide strong guarantees without super heavy over funding premiums. If you are looking for lowest cost guaranteed to age 100 then you will probably need to consider GUL guaranteed universal life which you can choose your age it’s guaranteed till or a non variable whole life program fully guaranteed. These insurance products are amazing if designed correct and will be there when your family needs them most.

#5 Mistake:
Not getting insurance when you are young and healthy.

This may be the worst of all and it’s such a hard trap to avoid. When we are young we all know we are simply immortal, or at least we think so. The truth is, from very early on, our health may be headed for a less than perfect status. Waiting till down the road may present problems in obtaining coverage at a good price or even at all. Genetics, unhealthy habits, or dangerous lifestyle may play a large role in the “I’ll purchase insurance later” game plan.

When we are young, this is possibly the healthiest we’ll ever be in our entire life and at the minimum you are definitely the youngest you will ever be. This is without question the best time to think about a permanent plan as the affordability will be a tenth of what it may be 15 or 20 years down the road. You certainly don’t have to solve for everything at this point but you will never regret starting earlier as opposed to later.