Life insurance is one of the easiest ways to provide financial security for your loved ones, but it’s also easy to make mistakes that leave you underinsured or uninsured altogether. Whether you’re buying your first policy or reviewing one you’ve had for years, knowing the most common life insurance mistakes can help you avoid costly gaps in protection.
Mistake 1: Relying Only on Employer-Provided Coverage
Group life insurance from your employer is a great perk, but it’s rarely enough on its own. Most workplace plans provide coverage equal to one or two times your salary, which may not cover major expenses like a mortgage, debts, or future education costs. Plus, coverage usually ends if you leave your job.
How to avoid it: Treat your employer plan as supplemental. Consider purchasing an individual life insurance policy to ensure consistent protection that stays with you, regardless of where you work.
Mistake 2: Not Reviewing Coverage as Life Changes
Big life events—marriage, having children, buying a house, or starting a business—often mean you need more coverage than you did before. Failing to review your policy after these changes can leave your loved ones financially vulnerable.
How to avoid it: Review your life insurance coverage at least annually, or anytime your financial situation changes significantly.
Mistake 3: Choosing the Wrong Type of Policy
Many people don’t fully understand the difference between term life insurance and permanent life insurance. Term life is typically more affordable and ideal for covering a specific period (like while raising kids). Permanent life offers lifelong coverage and can build cash value, but comes at a higher cost.
How to avoid it: Work with a licensed advisor to match the policy type to your goals, budget, and long-term plans.
Mistake 4: Underestimating How Much Coverage You Need
Choosing an arbitrary amount—like $100,000—without looking at your family’s financial needs can lead to underinsurance. Coverage should factor in income replacement, outstanding debts, and future expenses such as college tuition.
How to avoid it: A common guideline is 8–10 times your annual income, but calculating your actual needs provides a clearer picture.
Mistake 5: Forgetting to Update Beneficiaries
It’s easy to forget about your beneficiary designations—especially after life changes like marriage, divorce, or the birth of children. Outdated designations can cause serious complications or unintended outcomes.
How to avoid it: Review and update beneficiaries regularly to ensure your policy reflects your current wishes.
Avoid These Life Insurance Mistakes
By avoiding these common pitfalls, you can feel confident that your policy will protect the people who depend on you most. Not sure where to start? Professional Insurance Programs can help you review your existing coverage—or explore new options that fit your needs.
Call: 800-637-4676
Email: info@profinsprog.com
Visit: insuranceformembers.com