September is Life Insurance Awareness month, so learning about the most common mistakes that people make can help to honor the occasion. In understanding the mistakes people make, individuals can reach a better understanding for how life insurance works.
Mistake #1: Not Naming a Beneficiary
When an individual fails to name a beneficiary, the estate becomes the beneficiary. The policy then becomes subject to a tedious and intricate probate process, which means that the wrong people could receive the policy. Another mistake with beneficiaries that people make is to not name enough heirs. If both spouses died at the same time and the children were not named as heirs, it could go into probate. Additionally, never name the estate as the beneficiary because this subjects the proceeds to inheritance taxes that are higher than if beneficiaries are named.
Mistake #2: Buying the Wrong Type of Insurance
Life insurance fits into two broad categories: Permanent and term. Permanent lasts as long as the individual while term will end after a specific time period. Younger individuals should choose permanent because they can buy it cheaper, and it will last longer. Term is better for older people who are looking for a lower initial cost.
Mistake #3: Relying on Employer-Provided Insurance
While insurance provided from a workplace may give outstanding benefits, it is just a starting point for base coverage. Additional coverage helps to fill the gap, but the consumer should stay informed to know the right amount of coverage to purchase.
When choosing the right amount of coverage, the golden rule is to insure something for what it is worth. People have to consider the economic value they give to their loved ones. Online insurance calculators can help a person to buy the best amount of coverage.
Call Pachuta Insurance Today @ 706-769-2262
Sources:
Huffington Post
CNBC
Mistake #1: Not Naming a Beneficiary
When an individual fails to name a beneficiary, the estate becomes the beneficiary. The policy then becomes subject to a tedious and intricate probate process, which means that the wrong people could receive the policy. Another mistake with beneficiaries that people make is to not name enough heirs. If both spouses died at the same time and the children were not named as heirs, it could go into probate. Additionally, never name the estate as the beneficiary because this subjects the proceeds to inheritance taxes that are higher than if beneficiaries are named.
Mistake #2: Buying the Wrong Type of Insurance
Life insurance fits into two broad categories: Permanent and term. Permanent lasts as long as the individual while term will end after a specific time period. Younger individuals should choose permanent because they can buy it cheaper, and it will last longer. Term is better for older people who are looking for a lower initial cost.
Mistake #3: Relying on Employer-Provided Insurance
While insurance provided from a workplace may give outstanding benefits, it is just a starting point for base coverage. Additional coverage helps to fill the gap, but the consumer should stay informed to know the right amount of coverage to purchase.
When choosing the right amount of coverage, the golden rule is to insure something for what it is worth. People have to consider the economic value they give to their loved ones. Online insurance calculators can help a person to buy the best amount of coverage.
Call Pachuta Insurance Today @ 706-769-2262
Sources:
Huffington Post
CNBC
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