Life insurance is needed to secure the fate of the family after death. The money drawn can be used for numerous purposes. including, paying off loans and debts, child’s education, or securing the retirement of the widow or widower. Buying insurance is essential to secure a family’s future and hence, one must be extra cautious while doing so it can turn out to be unfortunate.
Here are the common mistakes to avoid when buying life insurance.
1. Focusing on the cost of the insurance and not on coverage
One of the most common mistake to avoid when buying life insurance is focusing on the cost the insurance and not the coverage. Never ever go for a cheaper policy because it has low premium rates. Paying low premium seems rational at first but when it is not contributing to enough savings, it is useless.
2. Not disclosing information
Fill all correct details in the form when buying insurance, including job description, medical details, and other details. Not disclosing all the important information might help save on premiums but that can also make your claim void. So, be honest and disclose all your professional as well as personal information.
3. Going for a long-term and inflexible plan
People usually select traditional life insurance plan as returns on this life insurance are predictable and steady. This is one of the most common mistakes to avoid when buying life insurances as these plans cost more compared to a pure term insurance plan. Besides, they are inflexible and exit due any reason is costlier.
4. Not picking the right type of insurance policy 
There are two types of insurance policies, permanent and term. Term life insurance policy offers coverage for a definite period of time. While permanent life insurance policy remains active as long as the premiums are being paid. Universal life insurance (death and savings benefits, flexible premium payments) and whole life insurance (guaranteed cash value accumulation, consistent premiums) are the two main types of life insurance policies.
One must weigh the goals against the cost and then select a type of policy. For example, a term life insurance policy is ideal if coverage is needed for a defined reason. On the other hand, for investment return, permanent life insurance policy is the most obvious option.
For other insurance tips, feel free to call some of the top insurance agencies in Australia today!
