Most people agree that they need some form of life insurance, although exact needs do vary from one person to the next. Yet most people don’t know much about life insurance beyond that. When you begin shopping for a policy, watch out for these two common mistakes.
Don’t buy the wrong type of life insurance.
There are several different types of life insurance. Beyond knowing that you need to purchase a policy, knowing the right type of insurance to fit your needs is even more important. Many younger people want to protect their families in the unlikely event of their death, so they shop for an insurance policy that will provide income replacement. What they might need is a term life insurance policy, which provides this coverage for a relatively low premium, but often people in this situation end up purchasing a much more expensive permanent life insurance policy.
That’s just one example, but the bottom line is that understanding the different types of life insurance policies will help you to choose the one that is best for your situation. It’s best to consult with a licensed insurance broker rather than simply enrolling in the first plan you see advertised on TV.
Don’t forget about comparison shopping.
Once you narrow down your options to the type of life insurance policy you really need, don’t just assume that all plans will cost the same. There can actually be quite a bit of variation in price from one insurance carrier to another, even on polices with the same value. So remember to shop around and you may even find a more valuable policy in your price range.