With more and more people investing in life insurance for their families and loved ones, it really is becoming a must have product. But with that comes a risk of people buying incorrect cover.
Arguably the biggest mistake people make is not getting enough cover. One could be forgiven for getting a £250,000 policy because the remaining mortgage is £250,000. But what about other expenses such as funeral costs, children’s education, debts (even short term credit card debts)? These are all important factors to consider when investing in a policy. Have a long term plan of how much you would like each individual to have and base a policy off that.
Another factor that you must consider when purchasing cover, is how often you will be updating the nominations for the cash benefit. Just because you nominated certain family members or friends at the start of a policy, it does not mean that you cannot change this. In fact one of the benefits of life insurance is the flexibility to be able to do this. To avoid disputes upon death, it is best to regularly review this as you would with any other type of insurance. People’s needs change so the flexibility to be able to do this is a benefit of having a policy.
Make sure all of the qualifying questions are answered correctly! Before taking out a life insurance, the provider will want to ask you about your medical history and recreational activities. Some people will try and sway these questions in the hope that the outcome will be more favourable. In reality, if upon your death it turns out that you lied on your application, then the policy would be rendered invalid, so just make sure everything is factually correct.
One way to avoid mistakes like the above is to make sure you speak to a consultant for free and impartial information.