Term Life Insurance..Common Mistakes

Shopping for life insurance can be a difficult and complicated process. I mean, your insuring your life...that's a lot of pressure. Well, for the purpose of this blog post lets assume you have figured out that Term Life Insurance is what makes the most sense for you and your family. Now what? Well there are some common mistakes that people can find themselves in when shopping for term life insurance. The first mistake is to focus solely on cost. Sure price is an important factor to consider when we buy insurance, but sometimes people start looking at it as a commodity and that is really dangerous. Not only are some insurance policies different, but in the past 15 years we are seeing a BOOM of life insurance companies that offer bottom dollar prices and go out of business leaving their policy holders holding a depreciated policy or worse.

The second biggest mistakes that shoppers find themselves in is not choosing the right face value. The tendency is to run arbitrary numbers based on what monthly payment you can afford. So then you have a $100,000 policy and have no idea what its going to pay for. Take some time when shopping and know what that policy is going to pay for (ie. mortgage, college, living expenses, etc). Most agents will offer different life needs worksheets that will give you a great understanding of what limits you need.

Another common mistake is not choosing the right agent. It is very important to choose a licensed agent that understands life insurance contracts and all of the options available within the contracts. There are to many fly by night insurance agents out there that are doing it as a hobby, and many times even people that mean well can end up getting you an option that was not right for you.

The last common mistake is people that dont consider any conversion options. An important option to have in your term life policy is the right to convert to a permanent life policy with the same company without submitting any additional evidence of insurability. This is important to consider because it will allow you to increase your policy even if medically you are consider uninsurable. You will never regret having this rider, but not having can cost you.