Saturday, July 28, 2012

Common Mistakes People Make When Getting Life Insurance

A recent study has shown that up to a quarter of the interviewed population is ready to cancel life insurance in order to save some money, especially during times of economic recession. Nevertheless, there are many more reasons why people should keep their life insurance policies; read this article and you will discover at least a few of them.

People don’t like to talk about their death, and don’t even like to think about what will happen after their death. While I will have to agree that this is a delicate and uncomfortable subject, a mature person should not ignore it, thinking about the financial stability of the remaining members of the family.

The statistics show that one in three adults has no life insurance at all; taking care of the financial needs of the kids of the deceased will be hard, in these situations.

Sure, life insurance is not mandatory (car insurance is) but the specialists say it is a good proof that you want to take care of your loved ones: your kids, your spouse, etc. When you sign a life insurance policy, you clearly demonstrate your care, respect and love for the people that matter to you.

Your life insurance needs will depend on a lot of factors. It means one thing for a person that has no kids and something totally different for someone with two or three kids, who need education and also a house to live in.

But how much should you insure your life for? A wise idea is to estimate the yearly revenue of the person who wants life insurance, and then multiply this number by the number of years until retirement. As an example, if you earn 40,000 USD per year, multiply it by 10 (ten years until retirement) and you get the recommended amount of money you should insure your life for.

Another mistake people do is to forget to stay up to date with the latest life insurance market news. The things in the insurance sector can change quite fast, and the offers that were considered to be good a couple of years ago might be outdated these days.

Keeping yourself updated will not only help you save money with your policy, but also pick a life insurance package that does the job. Many people sign a life insurance policy without actually understanding what the contract guarantees; they have not read the contract attentively, they did not ask questions, so they do not understand what they are insured for.

As an example, some people believe that they have bought a comprehensive life insurance policy, when in fact they have purchased an accidental death insurance package. And the official statistics show clearly that only 4% of the deaths are accidental, according to a survey produced by Millenium Asigurari Viata, a Romanian life insurance company.

So, instead of cancelling life insurance, it might be much better for you and your family members to get assistance from an insurance broker, who will definitely help you avoid these mistakes that are so spread among people. He is going to explain to you the benefits of each and every type of life insurance that is marketed; with his help, based on the real needs you have, you will be able to invest wisely your life insurance money.

At the same time, the broker will help you determine the exact amount of money you will need insurance for, taking into account several factors like your age, the number of kids that you have, and so on.

As with any other financial investment, comparing as many offers as possible is the key to spending your money wisely. Never sign the first contract you are given and never get too excited when the price is very low, as in most cases the services that you (or your loved ones) are going to benefit from will be very poor.

1 comment:

Unknown said...

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