Darcy Bergen is the owner of Bergen Financial Group and has over 20 years of experience advising clients on financial matters. His specialty includes IRAs, Social Security benefits, Fixed Index Annuities, and retirement planning. Darcy Bergen gets many questions about life insurance from his clients. To answer some of those questions, he explains five common mistakes people make when looking for life insurance.
Not Choosing the Right Type of Life Insurance Policy
According to Darcy Bergen, one of the biggest mistakes people make when shopping for life insurance is the failure to pick the right policy to fit their needs. There are two types of basic life insurance policies, term and permanent. With term life insurance policies, policy-holders can pick between a 10, 15, 20, or 30-year term. Once the term is over, they will need to buy a new policy. With permanent life insurance, there are no terms, and the policy remains in force as long as sufficient premiums are paid. Permanent life insurance holders can even accumulate cash value on the premiums they paid. It’s important to consider the pros and cons before committing to one policy over the other.
Under Calculating the Death Benefit
Aside from not getting the right policy, another mistake people make is underestimating how much insurance they need. Instead of picking a number based on their current financial situation and marital status, Darcy Bergen recommends people sit down and do their homework. For starters, they should think about their health, income, life expectancy, debts, and total assets. Someone who wants to have a family should also consider adding more to their death benefit if they’re going to have children in the future. Sitting down with a financial advisor like Darcy Bergen can help them with the decision.
Failure to Compare Rates
When shopping for life insurance, one of the biggest mistakes people make is not comparing prices. Even if one rate sounds appealing, it’s important to compare before purchasing said policy. When they compare policies, people often get the best deal for their money.
Only Focusing on Price
Another mistake people make when shopping for life insurance is only focusing on price and not focusing on the benefits. While it might be tempting to save on the premium, they might regret it later on in life when they realize the death benefit is not high enough.
Not Buying at the Right Time
Many people wait until they have a spouse and children to buy a life insurance policy because they don’t think they needed before that. Darcy Bergen likes to point out that this is a mistake since premiums tend to get higher as people get older.
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