If you’re shopping around for Life Insurance, you want to get it right. Take a look at these common mistakes, and how you can easily avoid them.
Getting yourself covered with the right Life Insurance policy can seem a little daunting at first. After all, you’re getting yourself into a commitment which could potentially last for decades. You’ll be keen to avoid any potential tricks, traps or pitfalls which might await the unwary.
Don’t worry, we’ll explain all here. Right here on the Beagle Street blog, you’ll find a list of ways to consider the cover that works best for you.
Choosing the wrong type of product
There are a variety of products, designed to match the unique needs of someone who wants Life Insurance. For example, Level Term Life Insurance could help protect your family long enough for children to grow up, but a Decreasing Term Life Insurance is usually purchased to run alongside a mortgage.
Take a look at our guide to Level Term Life Insurance and Decreasing Term Life Insurance to see which suits you best.
Not insuring for long enough
Life Insurance can be tailored to various different lengths and you should consider the length of time you would like to be covered for. Make sure your cover is going to last at least as long as needed. For example, if you’re taking out Term Life Insurance to ensure your newborn infant can always attend university, only insuring for 20 years could put them at risk of being short of funding if you were to die in their final year.
It’s impossible to predict what life might throw at you, so erring on the side of caution with the timing of your Life Insurance could give that little extra bit of security.
Thinking all insurers are alike
All Life Insurance companies are not created equally. Each has their own focus, their own specialities, and their own team driving the whole thing. That means you as a consumer can have noticeably different experiences depending on who you go with, and the power is truly in your hands when it comes to where you take your business.
If one insurer has turned you down, for whatever reason, don’t let that be the end of your Life Insurance journey. Other insurers might specialise in insuring people in your situation, or they might simply have broader criteria for who they offer cover to.
If you’ve made the decision to get covered, don’t let one knock put you off.
Confusing Life Insurance with other financial products
If you’re the type of person who likes to cover all the angles, there are all sorts of financial products on the map that can help you do that. Different types of insurance all have their own unique purpose if you wanted to explore a variety of options.
When it comes to Life Insurance, you need to be certain of the job you need your policy to carry out, and who you need it to protect.
Not reviewing your policy from time to time
Things change. Life goes on. What worked for you ten years ago in terms of career or relationships might not be the best fit today, and the same goes for your Life Insurance. It can be easy to just set it up and forget about it, especially if you go for Whole Life Insurance.
However, by re-applying for Life Insurance, or checking whether it’s possible to adjust your cover, you could not only tweak the policy so it’s working as hard as possible, you could also save money. If you’ve given up smoking for at least a year, for example, it’s possible that you could lower your premiums by letting your insurer know.
Insuring for the wrong amount
You could also consider the amount of cover that suits you so take a realistic look at the kind of lifestyle you want to protect for those you leave behind, and how that lifestyle might change over time (for example kids going to University is a big change), use that to assess how much cover you might need, based on the length of time you’d need to protect your loved ones’ lifestyle.
Failing to plan for a change in circumstances
With Life Insurance, the clue’s in the name: It’s for life, and life changes. Especially if you get insured when you’re younger, your cover might not account for some of the big developments along the way.
Your insurance needs are almost certain to change if, for example, you were to get married, have children, or take out a mortgage. But wait, there’s more! Those needs might change once again if you were to divorce, when your children grow up and fly the nest, or once your mortgage is paid off.
If possible, it could be a good idea to incorporate some wiggle room into your Life Insurance cover to account for things changing. This might concern the actual terms of the policy, or the amount you’re covered for. Either way, it could be a good idea to keep your options open.
Failing to pay your premiums
This might seem like an obvious one, but if you don’t pay your Life Insurance premiums, you’re not going to reap the benefits of cover. Often, it’s a simple oversight which leads people to default on their payments, and it’s easily corrected. For example, if you’ve got a direct debit set up to pay your premiums and you change banks, don’t forget to update things with your insurer.
If, however, you find yourself in financial difficulty and are no longer able to pay, don’t bury your head in the sand. Talk to your insurer as soon as possible if you suspect you might not be able to keep up payments, and get the full details about what your options could be in that situation.
Forgetting who might become a dependant
Life Insurance isn’t really for you, as much as it’s for those you leave behind. Your spouse and children are the most obvious people you’d typically class as a dependent, but don’t let that limit your thinking when it comes to planning for the future.
Being outlived by your parents is enough of a tragedy, but if you then weren’t around to care for them in their old age, that’s just one more thing on their plate which could potentially be avoided by making provision for them to be looked after in your Life Insurance policy.
Not reading the small print
Always read the small print. It’s not that anyone’s out to get you (hopefully!) but when it comes to Life Insurance, you need to be sure that the fine details match up with the big picture of how you need your policy to function.
Don’t be afraid to seek impartial advice from an Independent Financial Adviser on the little nuances that separate one policy from another. Time spent getting an expert opinion on important financial decisions is very rarely wasted, it could give you that little extra peace of mind and stop you feeling bamboozled.
Bending the truth on your application
When filling out an application, it can be mighty tempting to fudge the numbers on certain details, like the length of time since you quit smoking for example, in order to get a more favourable deal on premiums. However, it’s generally a bad idea, and is always risky.
If the truth comes out as part of an investigation into the cause of your death, the payout on your policy could be reduced to reclaim the money from the premiums you should have been paying. Alternatively, your policy could be invalidated altogether.
Play it straight with your insurer, and answer any questions they ask you as truthfully as you can. After all, it’s your loved ones who could suffer as a result of stretching the truth.
Blindly trusting price comparison sites
Price comparison sites are great, and they help thousands of people each day get great deals on everything from their supermarket shop to mortgages. That being said, they’re still subject to the laws of the marketplace.
It’s possible you might get different results from using different price comparison sites, and you might also get a better deal by buying direct. With something as important as Life Insurance, it could be a good idea to try more than one comparison site, as well as approaching an insurer directly to see what works out best for you.
Not reading consumer reviews
Nobody knows your unique insurance needs quite as well as you do. But people similar to yourself come a close second. Sites like Trustpilot are packed with reviews from other people in the same boat as you, and you could potentially benefit from their trial and error when it comes to picking the right Life Insurance.
Price comparison sites are another great source of opinions, and just like it’s a good idea to get your news from more than one source, visit more than one review site to make sure you’re getting a widely informed view.
Forgetting some of the costs to pay when you die
When you die, the cost of your send-off could fall to your loved ones. Depending on how much you leave to them, paying your funeral costs could eat into their Life Insurance payout. Remember to make provision for the costs to pay when you die, including:
• Your burial or cremation.
• Settling any potential debts your loved ones may be liable for.
• Childcare, and your children’s education.
• Mortgage payments.
• Maintaining your family’s lifestyle, including into retirement.
Not doing your homework
It’s sometimes the case that a little bit of research can clear a whole lot up when it comes to Life Insurance. Some people, for example, could have insurance through their employer and not know much about it until they check with their HR department, which might reduce the amount of personal cover they need.
Is one insurer offering you a suspiciously good deal on premiums? Check whether those could go up after the first year. How could different policies interact with one another? Who else could benefit from optional extras like child critical illness cover?
Asking questions like these could help your final decision on how, and where, to get covered.
Get Life Insurance right with Beagle Street
For the team here at Beagle Street, there’s no joy sweeter than hooking you up with the right Life Insurance to match your lifestyle. Our friendly experts can take you through the easy steps to getting the right cover for you. Get a free online quote to take the first steps to financially protecting your loved ones.