Life Insurance

Common Life Insurance Mistakes

Life Insurance

Be Prepared to Avoid These Pitfalls

A person sitting at a computer

Quick: how much life insurance coverage do you have? If you can’t name a precise dollar amount, you’re not alone. For a variety of reasons, too many people put off reviewing their life insurance needs until “tomorrow.” But waiting too long can make it more expensive or difficult to obtain. Here are five other common life insurance mistakes to avoid.

  1. Assuming your employer’s plan is going to be enough

    The most-generous employer-provided life insurance plans rarely provide more than five years’ salary, and most offer much less. What will your beneficiaries do in five years, when the income stops? The suggested minimum is either 10 years’ salary, or five years’ salary plus enough to cover your current debts and larger anticipated expenses.

  2. Thinking you can’t afford it

    Value alone makes term life insurance the best option for the overwhelming majority of people. Since term life premiums are about one-quarter the cost of those for whole life, a term life policy allows you to bump up the benefits for your survivors, while offering reasonable rates on  premiums.

  3. Selecting a term that’s too short

    Every insurance agent has a story about the sticker shock a client felt when it was time to purchase a new term life policy,  after an old term expired. The cost of life insurance premiums generally double for every 10 years of age, with greater increases if your health declines even slightly. Your best bet is to lock in your current rate for as long as you know your family will have mortgage debt, college tuitions or other significant expenses.

  4. Failing to see life insurance as an asset

    Most people know life insurance benefits your survivors after you die, but few understand how it can help you while you are alive. If your financial situation or health were to take a turn for the worse, a disability waiver, conversion or life settlement could help soften the financial blow.

  5. Being scared off by a medical exam

    No-medical-exam policies, such as instant-issue and guaranteed-issue life insurance, can cost more, but are a great option if you need coverage quickly or are too busy to go through the traditional process.  If you do have a health condition, look to maximize your employer coverage first.


    Call our insurance professionals for answers to your questions and access to a broad selection of products available through our industry-leading partner carriers. As the largest independent personal-lines agency in the state, we have the resources and expertise to tailor coverage to your specific needs, at prices that fit your budget. Call (855) 581-4799.

 

Related Articles

alt text

Basics of Life Insurance

Know the basics of life insurance and why you need it.

alt text

Living Benefits of Life Insurance

Life insurance policies can be tailored to help you navigate financial hardships in your life.

alt text

Term Life vs. Whole Life

Buy the life insurance coverage that fits your needs.


AAA Washington Insurance Agency

Contact AAA's life insurance professionals for answers to your questions and access to a broad selection of products available through our industry-leading partner carriers. As the largest independent personal-lines agency in the state, we have the resources and expertise to tailor coverage to your specific needs, at prices that fit your budget. (855) 581-4799

Find an Agent

request a quote