Life Insurance Policy Pitfalls
When it comes to life insurance policy, it may be very costly to make certain mistake. The problem with life insurance policy is that you may not be alive to witness or correct the mistakes which you might have made. So, prevention is better than cure, they say. Let me quickly take you through some of the mistakes people usually make with their life insurance policy.
Choosing the cheapest life insurance policy
If you are searching for the cheapest life insurance policy, I will not say you can’t get it. But the problem is that, it may not be the best deal for you. If an offer is too cheap, it may be a red flag that something is wrong. It is important you look beyond the premium and consider the reputation of the insurance company. There are insurance companies that will always come with reasons why claims will not be honoured. What is the benefit of buying a life insurance policy that the insurer will not pay at the end of the day. Before you commit yourself to any life insurance, you should endeavour to find out information about the insurance company you want to choose. What are the comments of the existing customers about the company? Are there complaints about their services? You should give customer service delivery a priority over price.
Read Also: How to find a good insurance broker or agent
Cashing in on life insurance policy
With certain life insurance policy, one is allowed to make withdrawal from the policy. While this can be like an advantage as it provides a cushion in case you require immediate cash for an emergency, this can also act as a disadvantage. If you make a withdrawal with the hope of paying back, you may end up not being able to pay back on time. This may lead to the cancellation of such policy. At best, the money will not be enough to settle your family when you die.
Choosing wrong insurance policy
In the above, I talked about the need to buy the life insurance policy that is right for you. Some people fail to seek the advice of a profession and just go ahead to buy a life insurance policy that comes their way. You don’t just buy any life insurance policy, your needs and circumstances will determine which one is right for you. Buying a wrong life insurance policy can be as good as not buying at all.
It is one thing to buy a right life insurance policy; it is another thing for you to get enough coverage. A lot of people try to be smarter than their insurer. If their insurer advise them to pay certain amount as premium, they will believe the amount is too much. They can decide to go for the premium that they can afford or that seems reasonable to them. The truth is that, what seems reasonable may not provide enough coverage for you. What you need in this circumstance is to ask your insurer to explain the basis for the calculation of the premium to you and the coverage it provides.
Ignorance or misunderstanding
For each type or class of insurance, there are usually terms and condition that govern the policy. How many people actually take time to read through and understand the terms an condition of the insurance policy they buy? Payment of your insurance premium is not a guarantee that your claims will not be rejected. No matter how long a policy document may be, it is important that you read it carefully. If there are certain things in the life insurance policy document that you don’t understand, it is important that you seek clarification. Even though you have paid your premium, you can still cancel the policy if you discover that the terms and condition are not favourable. If the request for the cancellation is made within reasonable time as the law permits, you will get a full refund of your premium.
Not reviewing policy
Life insurance policy is a policy that will stay with you for a long time. This alone necessitate that you review the policy on a regular basis. Imagine leaving the life insurance policy you bought ten years ago when you were still single the same way. Now, you are married. You have three children and they are in different levels in their education. It is be a mistake to assume that the same life insurance policy you had them will cover your family. As you are progressing in age, having children and situations around you keep changing, you need to review and update your policy so as to be sure that it provide enough coverage.