Life insurance is a safety net for your loved ones. You are providing financial security to those closest to you in the event you pass away. While life insurance is a great way to take care of those you love, there are right and wrong ways to apply for it, because you want to get the best possible coverage available. Whether you already have life insurance or you are considering the application process, here are some of the worst things that will set you back financially.
Probably the worst thing you can do when applying for life insurance is to lie on your application. You may think you can get a better rate by leaving out or conveniently forgetting serious health issues. The biggest lie people tell on their applications is the use of tobacco. Other common lies are drug use, depression, and income. It is a safe bet to assume that insurance companies will require medical histories and documents. If a lie is revealed on your medical records, you will be denied coverage.
2. Wait Until You’re Older
A common misconception is that it is better to wait until you’re a senior citizen to apply for life insurance. If you’re married or have children, you are denying them that safety net in case of tragedy. This is especially important if you do have serious health issues like tobacco use, depression, and any other illness that can become fatal.
While you plan on being there for your spouse and children, life doesn’t always go as planned. Give them the gift of security while you’re still young. Even if you don’t plan on being married or having children, applying young while you’re still in good health will give you the best rates.
3. Visit the Doctor
Going to see the doctor right before your insurance company’s medical exam is taking a big risk. Consider the possibility of your doctor discovering something of concern right before you meet with your insurance company. Now you are legally required to put your new health condition in the application and your rate may be higher. If you feel that something is seriously wrong, don’t hesitate seeing your doctor, but if it can wait, let it.
4. Choose Insurance Without a Medical Exam
It may seem tempting to select a life insurance company that doesn’t require a medical exam, but the rates will almost always be higher and you may not get as much coverage. Don’t be afraid to get a simple medical exam because you will most likely save more money by doing so. Shop around if you don’t like the first-rate you get and you believe you can do better elsewhere.
5. Purchase too Small
Getting too little coverage is a great way to make things even harder on your family after you pass. Don’t follow general rules of thumb like: “purchase eight times my salary”. Instead look at your individual situation. Are you financially stable, or are you struggling? Will your family be able to pay off your debts, or will it drag them under? Also, think about the income your family will lose without you working. Consider what expenses your family will most likely still be paying in 15 to 20 years.
6. Take an Exotic Vacation
Try planning exotic vacations until after your policy has been in effect for a while. There are a few insurance companies that want to know your vacationing plans and they will frown if you’re planning to go on a safari in South Africa or backpacking in Mexico. They also don’t like it when policy holders plan to live in politically unstable areas and places known for disease. You can still make all of your round-the-world traveling plans, but its best to wait a year or two.
7. Casually Smoke
If you know you have a health insurance medical exam soon, think twice before lighting up. Everyone, especially health insurance companies, knows the effects smoking has on health. Don’t lie on your application. However, even smokers who quit for a few days can have drastically improved vital signs. Smokers will definitely pay more than nonsmokers will, but if you’re showing good health signs you may get a preferred tobacco rate as opposed to standard.
8. Forget you Have Insurance
Once you have life insurance, don’t forget to review it every few years. What may have worked for you and your family five years ago may not work anymore. Consider changes in your overall lifestyle. Have you had children since applying for life insurance? Did you get married or divorced? Is your income better or worse? Have you been medically diagnosed with anything new?
Remember to go over all this with your provider even if you can’t think of anything that has significantly changed. They may be able to offer you a better rate today than you the one you received ten years ago.
9. Not Talk About it
Talking about life insurance with your friends and family may not always be pleasant, but it’s necessary. Before you apply, talk with your spouse about what they feel they need, and what your concerns are. If your children are mature enough to discuss your passing with, tell them your plan. Let them know they will always be cared for no matter the circumstances. If you have friends you need to include in your plans, give them a heads up now. Don’t wait until it’s too late to have serious discussions with your loved ones.
Applying for life insurance is the first step in making sure your family is cared for after you’re gone. Talk with them about it, don’t wait too long, and don’t forget to review it in a few years. Everyone agrees that talking about death is scary, but not being prepared for death is even scarier. Rest easy knowing your family, friends, and debt will be taken care of after you pass. Purchase a life insurance policy today, or replace your existing policy if you think you’re paying too much or you’re not covered enough.
To compare quotes, use our form on this page, or call us at 888-552-6159.