"The information is clear," says Jack Dolan, spokesman for the United States Council for Life Insurers (ACLI), an in-house trade group. "Citizens of the United States do not have sufficient insurance and are not buying coverage in an amount that is appropriate to their needs A report by LIMRA, an insurance research organization, in August 2010 revealed that prices for individual life insurance are the lowest for the past 50 years in the United States: 30 percent of households ( 35 million) do not have life insurance coverage.
Not having an appropriate policy after paying premiums over several years is a terrible waste of money. We asked several insurance experts to tell us what the biggest mistakes people commonly make when buying life insurance and this is what they shared.
Mistake: Extremely underestimate the needs of life insurance for your family and the "value of a human life." Marvin Feldman, the president and chief executive of the nonprofit Foundation for Life and Medical Insurance Education (LIFE), states that people often underestimate considerably the amount of life insurance they should buy. There are plenty of online calculators that can help you, including the LIFE Foundation calculator and Insurance.com life insurance calculator.
ErrorValue a spouse below their price. In addition to underestimating the cost of replacing the income of a working spouse, life insurance buyers often do not give the appropriate value to a spouse who does not work. Feldman states that it takes approximately $ 117,000 a year to replace that person, and "most people do not understand the impact that saves the family when a spouse stays at home.
Error: Buying a life insurance policy with premiums that increase over time. Too often, life insurance buyers find they can not pay premiums that escalate continuously and leave the policy to subside, says Amy Bach, executive director of United Policyholders, a non-profit agency dedicated to insurance education and consumer rights.
Error: Do not carefully examine all types of life insurance available. Dolan points out that "temporary life insurance, for young people in particular, typically provides a maximum return on total life insurance ... However, young people do not appreciate levels of lifetime premiums that include insurance of total life as they only think about short-term benefits.
Total life insurance, with its cash value, also promotes savings
James Hunt of the Consumer Federation of America, a consumer support group, warns that many buyers stop paying cash value policies in the early years of the policy. "This does not mean that cash value policies are not acceptable investments when you have them for at least 20 years and preferably for a lifetime," he says. But when people neglect their total life insurance policies, the "excess premiums paid during their term [life insurance premiums] ... are lost
A LIMRA report of the total life insurance loss index shows that nearly 12 percent of total life insurance policies fall in the first year, 10 percent decline in the second year and almost 7 percent leave in the third year of buying them. By contrast, the temporary life insurance loss index was about 7 percent in the first two years and about 6 percent in the third year.
Error: Buying a complicated cash life value product without understanding its terms and conditions when it is made cash. Even when your financial situation indicates that total life insurance meets your needs, Bach warns that buying a policy you do not understand is a financial mess.
Error: The one that convinces you to finish or reduce --- or do not maximize --- the contributions to your retirement / retirement accounts. Hunt warns that you should avoid deals that reduce your retirement accounts that give you income deductions, such as 401 (k), to be able to pay a cash value life insurance policy.
Error: Misinterpreting prices and this prevents you from buying life insurance. Feldman states that most people think that an insurance
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