7 Mistakes to Avoid When Shopping for Life Insurance

When you purchase life insurance, you’re getting important protection and peace of mind for yourself and your family. You’ll want to make sure you make the right choice, so you have the coverage you need. Here are some common mistakes to avoid when you’re shopping for life insurance.

1. Getting the Wrong Type of Policy

As you figure out how to shop for life insurance, you’ll quickly realize there are many different types of policies. They vary based on how long the policy lasts, whether the premium or benefits can change and if they build cash value.

The two main types of life insurance are:

• Term life insurance: This is less expensive and covers a set period of time. 
• Whole life insurance: This is more expensive but covers you for life and builds cash value.

The type that’s right for you will depend on your needs, future plans, preferences and financial situation.

2. Waiting Too Long to Buy Life Insurance

If you’re young and single, buying life insurance might not be a priority. But if you plan to have a family or expect that people will rely on your income in the future, you may want to look into life insurance sooner rather than later. 

3. Relying Only on Group Life Insurance

You might have group life insurance through your job, an association or a union. This type of life insurance is usually inexpensive, and it might even be free to you as part of a benefits package. You don’t need to qualify or have a medical exam to get it. 

Group life insurance is nice to have, but it may not fully meet your needs. Plus, this insurance likely doesn’t move with you when you leave a job.

4. Focusing Only on the Premium

Getting the most value for your money doesn’t mean buying the cheapest policy. Many factors play into how much life insurance costs. It’s a good idea to work with an insurance agent to make sure you get the coverage that’s right for you.

5. Being Underinsured

When you buy life insurance, you’ll probably be looking at some big numbers. Your family may need income to pay off a mortgage, cover the cost of college education and manage everyday household expenses. Is the coverage enough?

6. Not Considering Term Life Insurance

Some people consider term insurance to be a waste of money, since it’s not guaranteed to pay out and it doesn’t have cash value like some whole life insurance policies do. But term life insurance can be an affordable option to cover a set period, such as your working years, the time until a mortgage is paid off or while your children are dependents. 

7. Expecting Life Insurance to Be Your Retirement Nest Egg

Permanent life insurance can build cash value, and you may be able to borrow that money tax-free. You’re effectively borrowing from yourself, and money you don’t pay back comes out of your death benefit. 

While using your life insurance to fund your retirement is an option, you could purchase term insurance, which is cheaper, and invest the difference in another type of account. A financial advisor can help you understand the pros and cons of different options.

Farm Bureau Knows Life Insurance

Avoiding these mistakes can be easy if you work with a Farm Bureau agent. They can answer your questions and help you find coverage that fits you.

Neither the Company nor its agents give tax, accounting or legal advice. Consult your professional adviser in these areas.