4 Mistakes To Avoid When Choosing Life Insurance

Life insurance is a type of coverage where the beneficiaries receive a lump sum upon the insured individual’s death or after the agreed period. Having life insurance is fundamental since it protects your family from a financial crisis in case a tragedy happens to you. Ideally, it provides financial security to the beneficiaries.

There are many types of life insurance, the most common ones being term and whole life covers. The benefit of having this type of insurance is that the company can compensate you some amount if you urgently need it, depending on their policy. There’s also a guarantee that your family will get the payout immediately upon your demise.

Getting life insurance has immense benefits. However, there are mistakes you need to avoid when choosing one. Here are some of them:

  1. Doing Inadequate Research

Many people don’t know what exactly life insurance entails. They have no idea of the meaning of terminologies like premiums, policy, claim, and the like. Thus, before getting life insurance, it’s best to learn more about it to understand its every detail.

Proper research is fundamental since it helps you make an informed decision when choosing the company to cover you and the type of insurance. Failure to get appropriate information can cause you to settle on a policy whose premiums you can’t manage to pay.

Moreover, you may go for a company with a questionable reputation or history. And when you find yourself in such a situation, you only have two options. The first is bearing all the consequences, and the other is canceling the insurance policy.

Therefore, it’s essential to research different companies online and compare their premiums, policy features, benefits, fees, and terms and conditions. Customer reviews will also help you decide whether to settle on the insurance provider or not.

  1. Concealing Important Information

When applying for an insurance policy, the agent responsible for this role will ask you a variety of questions to ascertain your credibility and eligibility to get the coverage. Thus, you may have to tell them about the following:

  • Your family’s medical history
  • Occupation
  • Hobbies
  • Health condition
  • Driving record

This process is called underwriting. Not only do the insurers know if you qualify for the policy, but it also helps them ascertain the premium amount you’ll be paying. It would be wise to avoid giving incorrect information and answer all questions accurately and with all honesty. The reason is that they’ll verify your answers in the following ways:

  • Reading through your vehicle report
  • Checking your drug history and medical reports with your consent
  • Getting information from third parties

If the insurer finds out that you gave incorrect information or hid any necessary details, they’ll reject your claim or cancel your insurance policy. Therefore, if you want a seamless process of applying for insurance coverage, ensure that you answer their queries truthfully.

  1. Purchasing The One With Little Coverage

It’s essential to know that the higher the insurance policy coverage, the more you’ll have to pay. However, this shouldn’t scare you to a point where you avoid getting adequate insurance. As long as you have a source of income, you can save money and pay the premiums on time.

You can avoid skimping by finding a professional to help you calculate the amount of life insurance that’s adequate for you. They’ll consider all your financial responsibilities, like paying school fees and clearing debts. Also, they’ll compile the total value of all your assets.

After subtracting the total value of financial obligations from the assets, you’ll arrive at the ideal insurance premium amount that you won’t struggle to pay. Thus, you should avoid guessing the amount that you can afford because you may be underestimating your ability.

  1. Failure To Read The Policies And Terms 

Despite insurance experts’ advice to read all the insurance company’s terms, conditions, and policies, most people don’t. Thus, to avoid being part of this group, you’d want to read through the policy-related document, which also has information on exemptions and exclusions.

The reason why it’s vital for you as the policyholder to fulfil that obligation is to avoid getting yourself into any disputes in the future. Moreover, it’ll help you make an informed decision before choosing the company.

If you’re having trouble understanding some of the terms of your life insurance policy, it would be best to ask for help from a financial adviser or one of the agents in the company.


A life insurance policy is beneficial since it’ll play a key role in giving your family financial security in case a tragedy occurs and you lose your life. Always remember that you’re purchasing life insurance not just for yourself, but for those you care most about.  

Some of the mistakes you should avoid when choosing this type of insurance include: giving incorrect information, failing to do proper research, going for inadequate coverage, and not reading the terms and conditions. This can cause you trouble in the long run; thus, you ought to be careful.