It is hard to dispute the merits of Raleigh life insurance, but many people in North Carolina do not pay attention to its importance. As a shining pillar of your personal finance, avoid the following mistakes:
1. Not Having One
Not every person needs life insurance, but it is something that you must have if other people are depending on you financially. If nobody is going to struggle with money problems when you pass, then you have an excuse not to have it. But if you are the bread-winner or at least a contributing member of a household, strongly consider getting one.
According to a recent study, about four in every 10 Americans do not have any form of life insurance even though nearly 70% of people say they need it. Some individuals might argue that it is expensive, but there are insurance policies with a $1 million benefit that only cost $500 per year.
Another reason why some people are uninsured is that they hate thinking about death, so they do not think about life insurance, too. People who want to have life insurance but are intimidated by its complexity.
While many insurance products come with different features that can make your head spin, you do not really need to get all the bells and whistles to make life insurance worth the trouble. You can get a basic policy and still enjoy peace of mind knowing that your family will receive adequate money in the event of your unexpected death.
2. Choosing a Policy Without Running the Numbers
How do you know which life insurance policy makes the most sense to your situation? Multiply your annual income by 15 to determine the product with a suitable death benefit. When the money is invested to earn at least 5% per year, it can grow annually enough to match at least 75% of your income.
3. Considering One an Investment
Look at a life insurance policy as a risk management tool instead of an investment. The spirit of insurance is to protect your family from financial hardship when something happens the can devastate your household’s overall income. If you have enough emergency cash reserves and an intact 401k, then you probably do not need a product with an investment component.
4. Not Considering One an Investment
But if you can pay more for life insurance, use it as a forced savings mechanism much like building home equity through mortgage payment. Many policies offer such, so understand how all of them work to compare them accurately.
5. Replacing One Prematurely
When changing life insurance products, it is better to pull the trigger only when there is a guaranteed replacement. You might be denied to get a new policy because of a newly discovered health problem, so do not cancel what you currently have without assurance. When there is cash value involved, think about its future growth and the probable tax complications before cashing in.
Life insurance is generally a useful product. Shunning it to avoid the thought of your demise will not help your loved ones financially when you are gone.
