Like most new parents, you probably began buying baby items shortly after your doctor confirmed your pregnancy, but if you’re like millions of your fellow Americans, a life insurance policy probably didn’t make your “must buy” list. Buying life insurance when you’re entering a new phase of life seems like a depressing thing to do, but to better ensure your child’s future, it’s a wise decision. If you haven’t bought a policy, don’t worry. It’s not too late to get one, but be sure that you don’t make any of these five mistakes:
Not Having A Policy
Sure, this seems like a given, but millions of people don’t have insurance in place. By having a policy in place, you are providing for your child financially, so that his or her other parent or caregiver has money with which to care for the child. According to the USA.gov website, a term life insurance policy is your least expensive option and most people can find ways to work the minor expense into their budget. Some short-term budget cuts are well worth the peace of mind knowing that your family will be taken care of in your absence.
Buying Too Little Coverage
Having some life insurance is better than having none at all, but if you’re buying it, you might as well do some simple fourth-grade math to make sure you’re buying enough. The general rule of thumb is to have a policy with a value of eight to ten times the amount of your annual income. So if you earn $50,000 a year, you should have a policy worth $400,000 to $500,000. If you pass away and your survivors invest it, they should be able to live off of the interest without touching the original balance and use the money for things like childcare, college tuition and paying off the mortgage.
Leading An Unhealthy Lifestyle
A quick look into life insurance price quotes reveals that your pack-a-day habit will take a toll on your premiums. You shouldn’t wait until you’ve quit smoking or lost that extra 30 pounds, but it’s important to make your health a top priority to ensure you live to see your future grandchildren and to keep your insurance premiums low. According to a report from MSN Money, a smoker pays 600 percent more in life insurance premiums than a non-smoker. Be sure to seek medical help to turn your unhealthy habits into good ones.
Lying on Your Application
Tempting as it may be to fudge the numbers and not admit to the fifteen extra pounds you’re carrying around your middle, don’t do it. It will look quite suspicious when you get your psychical done and–in just a matter of days–you’ve gained that much weight. Additionally, if you make a claim within the first two years of having your policy, the insurance company can go back to your records to see if there’s anything suspicious in your medical history or if there are lies on your application, and if found, they can void your policy and not fulfill your claim. Polices can also become void if your application is found to contain lies.
Expecting to Earn Money
For young families, term life insurance is usually the best option as it’s inexpensive and offers basic, no-frills coverage. Insurance providers offer other types of life insurance, such as whole life and universal life insurance, which come with savings components and offer lifetime coverage, but a term policy meets your short term needs by providing a financial safety net while your kids are young and the budget is tight. If you get a financial bind, an insurance annuity can provide relief. These contracts often allow for owners to take out a lump some of money during financial turmoil. Once your career is in full swing and the kids are grown, you can reevaluate your insurance needs.
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I strive to treat my prospective clients with the utmost respect and I believe an educated prospect can make the right decision without sales pressure.
Being independent, I represent many highly-rated insurance companies and, because I am not beholden to any one insurance company, my focus is to find the right company and policy for each individual client.
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