You know that a responsible economic plan includes life insurance if you have dependents, depending on your income. Life insurance is important if you want to preserve the financial situation of your family if you die. But before you commit to a policy, consider these 5 pitfalls of life insurance:
1. Getting the Wrong Type of Life Insurance
One of the most important things to understand is that life insurance is divided into two main types: term life and whole life. Term life is that for a moment before the policy expires and you are covered for longer. lifetime (in its various incarnations) is intended to cover all his life. As you continue paying premiums, your life is covered.
Every life is useful in several situations, and in some cases, the combination may be useful. However, before choosing one or the other, to keep your situation and needs of your family. Then, select the type of life insurance that is best suited to your individual situation.
2. Choosing the Wrong Coverage Amount
When you select a life insurance policy, you must decide how much coverage to get. You may end up with a cover too little - or too much life insurance cover. Think about how long the coverage is necessary and what is necessary to the family along, if you are no longer able to offer them, because of your death. Also take into account other sources of income in the family may also have passive income or part-time jobs held by spouse.
3. Terms of Coverage
Make sure you understand the terms of your insurance coverage. Some types of death can not be covered, depending on circumstances. Many insurance will not pay death benefits if the insured takes his own life. Other policies that do not cover suicide in the early years of the policy. Make sure you understand what's covered - and when.
4. Missed Premium Payments
To ensure that you can make life insurance premiums when you sign up. In fact, it's usually a good idea to leave scope for an increase in premiums. This is because if you do not charge a premium, the coverage may be suspended or revoked. If you are behind on the premiums, when you pass, your family can not get the benefit of death. Trying to get insurance can once again become its own challenges, which can cause problems - and can lead to a higher rent than that of the original policy.
5. Variable Life Premium Increases
While it is possible to see increases in insurance premiums on the life of others, is likely to see a change in life insurance. Those that have a duration of insurance premium increases can be seen when the market goes bad, and the insurance company needs more to fulfill their obligations. For those with variable life insurance policies, in a down market, this can be a double whammy, because the political value of the results of small market suffers. Even if the variable life insurance will fit well in a financial plan, you should consider a variable life policy, and decide if it's something a little less hazardous, may be in place.