Biggest Mistakes in Life Insurance

Here are the four biggest mistakes when taking out life insurance.

These include:

• Never buy blind
• Be truthful
• Do not just sign on the dotted line
• Do not go on a guilt trip

 

Never buy blind – Biggest Mistakes

• Never, ever, enter into a life cover contract blind-folded.
• An educated approach is the best policy, and this is made easy with the myriad of information available today on the internet.
• Study all options and make an informed decision about the payout benefits and type of cover best suited to individual needs.
• Avoid unnecessary additional benefits such as dread disease cover if there is no family history of such illnesses. These could add substantial amounts to monthly premiums and end up being an expensive and unnecessary additional extra.

 
 

Be truthful

• Non-disclosure at the outset of the policy could have disastrous results when it comes to death payout benefits.
• If an insurance company discovers that the policyholder withheld important information – such as health issues, or drug and alcohol abuse – payouts will be declined at the time of the death of the insured person.
• Questions asked when applying for life insurance helps companies to build a risk profile and establish death benefits and monthly premiums.
• Also, any omissions give insurance companies the legal right to decline claims, leaving beneficiaries financially stranded.
• Honesty is the best policy.
• Rather pay a higher premium knowing that beneficiaries will be financially secure than run the risk of having death benefit payouts denied.

 

Do not just sign on the dotted line – Biggest Mistakes

• Never fall into the trap of assumption.
• Read through the contract with a fine tooth comb before putting pen to paper.
• Clarify any exclusion clauses
• Also, know what you are buying – a life insurance policy that matures upon death, or a term policy that expires after a set number of years.
• Ascertain whether the insurance company must be notified of any changes in medical conditions.

 

Do not go on a guilt trip – Biggest Mistakes

• Do not fall into a guilt trip by adding additional benefits to the policy.
• Also, at the time of death, life insurance should cover monthly income, taxes and estate duties and cater for future family needs.

 

The Advantages

The main advantages of life cover are:

• Cover from date of signature
• Immediate death benefit payout
• Benefits go directly to beneficiaries and not to the estate
• Payouts are tax-free

 

Conclusion

Of all the numerous insurance products available on the South African market, life insurance is undoubtedly one of the best choices on offer.

So it safeguards beneficiaries from financial deprivation and gives policyholders the peace of mind to sleep well at night knowing that those near and dear will be well cared for at the time of their death.

 

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All info was correct at time of publishing