Buying life insurance is an important step to protect your loved ones financial future. But the process can seem overwhelming. There are ample opportunities to make a life insurance mistake when researching life insurance policy options. With so many options, different types of coverage and the prospect of gathering multiple life insurance quotes, its easy to end up with a policy that doesnt fully meet all your needs.
SelectQuote Licensed Agent and Conversion Supervisor John Schmidt shares some common mistakes and solutions for how to overcome those mistakes when buying life insurance. He also offers solutions to help you avoid them.
Life Insurance Mistake #1: Buying Life Insurance From Your Home and Auto Insurance Provider
According to John, this is the most common mistake that life insurance buyers make. Many people will automatically buy life insurance from the same insurance agency that provides their home and auto insurance. While this action itself isnt a mistake, often the customer has not done any comparison shopping to make sure theyre really getting the best deal. The only exception is SelectQuote offers both life insurance and home and auto policies.
In many cases, they end up overpaying, said John. Because the company theyre getting the policy with, their core business isnt life insurance. Its something else.
Solution: Make Sure to Get Different Life Insurance Quotes
Using one insurance provider for all your insurance needs may be the easiest choice, but it wont necessarily get you the best deal or the coverage amount you need.
The best way to combat this is to do your due diligence and comparison shop amongst different life insurance companies. With all the types of life insurance out there, you can get peace of mind from finding the policy that suits all your needs — often for the best price, too.
Remember, SelectQuote makes it easy to get multiple life insurance quotes.
Life Insurance Mistake #2: Thinking Only About the Present
40% of Americans dont own life insurance policies. If you have one, its great that youre thinking about the future — but there still may be room to improve on the policy.
Another common mistake, said John, is when life insurance buyers dont think about anticipated income growth. Additionally, buying a life insurance policy with an eye on the future can apply to other situations as well – such as getting married or having children.
A lot of times [clients] will focus on the present, John said. They say, ‘I need $200,000-$300,000 to pay off my mortgage. If its paid off, my wife will be okay. But three years from now, if youre making twice the salary and you have two kids, would that be enough?
Solution: Talk to Your SelectQuote Agent About the Level of Insurance You Qualify For
John explains that most companies will allow you to buy more life insurance than what you currently have in mind. When completing the application process, he says: Go ahead and try to get qualified for the highest amount that youre interested in, or you think you might need in five years.
Once youre approved, you can decide whether you want to go with the higher amount now or defer that to the future.
Johns biggest piece of advice: Buy with the future in mind, not just the present.
Life Insurance Mistake #3: Buying a Whole Life Policy Without Getting Other Life Insurance Quotes
Many people will buy a whole life, or permanent insurance, policy without exploring all the options available. Though the name may provide a sense of security, making the policyholder feel that they are covered for the long term, there are other policies that may actually be a better fit.
[Clients] should be very careful about buying any type of permanent life insurance policy without doing the research to understand what theyre getting into and how the policy works, says John.
Solution: Do Plenty of Research When Buying Any Type of Permanent Policy
When considering this type of policy, John suggests doing plenty of research and reviewing your options with people in the insurance industry or your financial planner, who can help you make the correct decision for you.
Its really a good idea, whenever a client is considering those policies, to actually have a copy of the sales illustration and have it reviewed by the SelectQuote agent, or if they have a financial adviser thats a CFP, says John. They can review it and they can help them understand what theyre getting and what theyre getting into before they actually buy.
If youve recently bought a whole life policy and have started to wonder whether its the right fit, you may still be able to make a change. Every state has a Free Look Period, which means you have a specified period of time – generally 30 days, though it varies by state – to cancel your new policy without penalty.
Outside of the Free Look Period, if you want to change from the whole life policy, you wont receive a full refund, so youll have to cut your losses. However, reshopping for life insurance and changing to a more affordable term life policy may still be the best option.
Contact SelectQuote To Avoid These Life Insurance Mistakes and More
At SelectQuote, we work with the most reputable insurance agencies in the business. Our first priority is helping you find the policy that meets your needs, goals and budget. Our term life insurance calculator can help you review other considerations.
Best of all, we take all the work out of the life insurance quote comparison process: all it takes is the click of a button to get your free life insurance quotes.
Once you submit your request to obtain your free life insurance quote, you can choose to either:
- Speak with an agent immediately via phone, or
- Send your request to a licensed agent in your state, who will call you to complete an interactive questionnaire.
You can rest assured your licensed SelectQuote agent will be alongside you every step of the way to make sure you don’t make common life insurance mistakes and your life insurance policy is one you feel great about.