Don't Screw Up Your Life Insurance!

By Author: Norris Rios
Total Articles: 572
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Nobody wants to ever think that they're going to die. The 'not-so-funny' thing is, that's the only thing we all have in common.

Hopefully though, it's after you have lived a long healthy life. Regardless, it is important to make sure you get adequate life insurance to protect you and your family in case something happens to you. Or maybe you have just purchased a home and want it to be covered.

In either case, it is important for you to take a few minutes to research your life insurance options and make sure you understand what amount of coverage you need and what sort of policy suits you best.

So if you are in the market for life insurance, it is your responsibility to make sure you don't place your finances in jeopardy, by making some of these basic insurance screw ups.
Going Cheap

The price should not be your only focus when you are buying life insurance. Life insurance policies aren't black and white and each one has a few different features that make it hard to measure against another.

In general though, term life insurance is cheaper to purchase than whole life. Although that fact ...
... alone, doesn't make any one better than the other. With that said, a lot of term policies are convertible, meaning they can be switched into a permanent insurance policy at a later date, no matter what sort of health you are in. All of these policies differ in conversion terms and some are better than others for your situation. You need to figure out which suits your situation best.

There are some term policies that offer the conversion option up to age seventy, which is pretty amazing. Don't forget to find out exactly what the terms are and if there are any restrictions. You don't want the fine print to come back and bite you.

As well, there are limits to any policy, ensure you understand the limitations with all of your insurances.
Waiting For The Right Time

Stop waiting because there never is a 'right' time to buy life insurance. Nobody really wants to think about buying life insurance. Who wants to think about dying? Bottom line is, if you're not financially independent, you need life insurance to make sure that your debts and family are taken care of.

As well, life insurance is relatively cheap when you're young and healthy. As you get older the premiums start increasing and if you end up seriously ill, you might not qualify for life insurance.

So the best time for you to get it is when you are young and healthy.
Don't Forget Life Insurance Is An Investment

Did you know that variable life insurance is a type of policy that gives you life insurance protection along with a cash value. You see some of your premium pays for the life insurance coverage and the rest goes into an account that will accumulate for you.

Often it is up to you to decide what mutual funds you'd like to invest this money in, so you need to make sure you keep on top of how they are doing if you want to make the most of your investment.
Missing Payments

Did you know that a late payment can affect a universal life insurance policy. This type of insurance can be a permanent policy that is sold as having long-term guaranteed protection at a low rate and is considerably different from term insurance. A lot of these kinds of policies have a cash surrender value but universal life with secondary guarantees, looks to maximizing the insurance available per dollar of premium.

In turn, some of these policies are reliant on the timing of your payments. If you are late with your payment, you policy may no longer be guaranteed. So if you bought the policy and it was guaranteed to age one hundred. Missing a payment may make it only guaranteed to age ninety-two.
Do Not Borrow

You can use the cash value of your policy after it accumulates to a reasonable amount, normally after about ten years or more. Of course there is a cost and you have to weigh the pros and cons.

The rate of return is generally not that good either, so you have to watch yourself.

As well, if you've taken out too much money, all of the gains you have made may be taxable. Make sure you ask your tax advisor if you have any questions.
Bottom Line

Life insurance is very important as you are building your life. You need it to protect you and your family if a tragedy should occur. Ensure that you do the research and make sure you get the coverage you need, for the right price.

The chances are pretty good that if you've got the appropriate life insurance in place, you'll never have to use it. And that's a good thing!