It is evident that life insurance is common in every individual’s financial plan. Over the years, there have been many misunderstandings about life insurance, and this has been caused jitters in quarters by the manner in which life insurance products are sold. Do you have a life insurance plan?
If no, here are Common Mistakes in Life Insurance Policies you should avoid:-
Underestimating insurance requirement
In the modern times, many people choose their insurance covers or the assured mostly based on the plans from their agents and how much premium they can easily afford. According to experts in insurance, this approach is very wrong. People should understand that the insurance requirement is a function of their financial situation, and it does not have any type relationship with the products available.
Choosing the cheapest policy
Many insurance buyers opt to buy the policies that have the most affordable the rates. This can be a grave mistake. As we all know, cheap is expensive. These affordable plans are not always the best, because, in the event of untimely death, the companies are not able to fulfill the claim. The ones that can meet the claim do it after a very long time, and this is not what many people want. When choosing the company to buy your life insurance, it is important to do some research. Choose the company that has proven to pay its claims from previous clients. Avoid companies that have a record of refusing to pay claims.
Treating life insurance as an investment
This is one of the common misconceptions about life insurance. Many people believe that life insurance is a good investment or sometimes a retirement planning solution. This misconception is as a result of some insurance agents who tell their clients lies to sell their expensive policies and get high commissions at the end of the day. When you compare the returns from the life insurance policies to the other investment opportunities, it does not make sense as a form of investment. If you are still young, go for other types of investments that will benefit you at the end of the day. Life insurance should only be considered as a protection to your family when untimely death occurs.
Buying insurance for the purpose of tax planning
For many years, many insurance agents have tried all they can to convince people to buy insurance plans to save tax. What many people do not know is the fact that using insurance as a tax taxing investment is the worst thing they could do. There are other opportunities available for that purpose. Conversely, it is prudent to get the facts correctly to keep future regrets at bay.