Life Insurance 101: 3 Common Mistakes to Avoid

No matter your current life situation, having a solid life insurance policy in place can protect your loved ones and make sure there are enough funds to cover your funeral expenses and other final wishes. While it may not be the most exciting thing to shop for (or even think about), the reality is that everybody needs life insurance coverage. Unfortunately, there are some very common mistakes people tend to make when it comes to this type of coverage.

Mistake #1: Putting Off Shopping for Life Insurance

When you're still relatively young, you may not see the need for a life insurance policy. This may be especially true if you're unmarried, don't have children, and/or don't have a lot of other financial obligations (such as a mortgage). In reality, it's never too early to shop for life insurance. The earlier you secure coverage, the less you'll spend. Waiting until you get older to buy coverage is risky because by then, you may be considered a higher-risk policyholder and will thus pay more for your coverage.

Mistake #2: Assuming Your Group Life Insurance Is Enough

If you have group life insurance through your employer, you might think your coverage is enough. While it's nice to have group life insurance coverage (especially if it comes at little or no cost to you), the reality is that this coverage alone is rarely enough to meet your needs. Instead, you should shop for your own life insurance policy and consider your group policy as a supplement.

Mistake #3: Not Understanding Term vs. Whole Life Insurance

Buying the right type of life insurance coverage is a must, but many people confuse the two types of coverage: term and whole (or universal). A term life insurance policy will only cover you for a certain number of years and costs significantly less than a whole life insurance policy, which is designed to be in place for life. Meanwhile, a whole life insurance policy offers some tax benefits that a term policy may not. Be sure to consult with an insurance provider to determine which type is best for you based on your age, health, and other factors.

Carrying life insurance coverage is one of the best ways to protect your loved ones in the event that you pass away. And while it's certainly not something that's fun to shop for, it's important. By avoiding these common mistakes, you can make sure you end up with the right coverage.