As a working adult, availing a life insurance plan should be the first item on your personal finance to-do list, given its ability to fulfill various needs and coverages. However, investing in life insurance can be complicated and even overwhelming to many of us. This might be due to how niche insurance plans are, and how such topics aren’t widely communicated. Here’s our curated list of mistakes to avoid when it comes to buying life insurance.
1. Not Insuring Yourself
As impactful and important a life insurance plan can be, it isn’t always at the top of our minds, especially among newcomers in the workforce. For most working adults, especially those working away from their family, varying financial commitments tend to get in the way, and the idea of committing to an insurance premium can be daunting. Being uninsured means that, in the event of unfortunate incidents, your close family members will have to deal with a financial crisis, on top of emotional damage. If you are the sole breadwinner of your family, it is a lot worse.
2. Being Underinsured
According to the Commonwealth Fund, if the amount you spend on out-of-pocket healthcare expenses (such as your insurance premium) is only between 5% to 10% of your annual income, you are considered underinsured.
Being underinsured is the inability of your life insurance plan to cover for your varying commitments, should the worst happen to you. This significantly increases the risk of financial planning; it might even trigger a financial crisis. Being underinsured is as bad as being uninsured, if not worse. Here’s a life insurance tip: Always avail an insurance plan that caters to the stage of life you are in.
3. Availing The Wrong Insurance Plan
One of the common mistakes made by people is buying an insurance plan that does not cater to their needs. This translates into misplaced expenses from your end, followed by inadequate protection. There are many types of insurance in the market, such as term life, whole life, critical illness and cancer insurance. The primary function of an insurance plan is protection when things go wrong. Educating yourself on the different types of insurance plans helps you make better-informed choices.
4. Not Insuring Your Family Members
Once you have insured yourself, insuring your family members should be the next item on your to-do list. When a family member leaves you, there will undoubtedly be emotional distress, but what comes after may catch you off guard. The large sum that you will have to fork out for the funeral and their outstanding financial commitments, if any, can set you back financially. Therefore, it’s crucial that you insure your family members to avoid any financial problems on top of your emotional burdens.
5. Not Updating Your Policy
In the context of insurance, an insurance policy update means reviewing your coverage, beneficiaries, etc. We recommend reviewing your policy when you achieve significant milestones in your life, such as marriage, becoming first-time parents, when you purchase new properties, or when you reach a certain age. This is to ensure that the coverage you receive is able to alleviate your family’s financial difficulties, should the worst happen to you.
When you avail insurance plans from the top and reputable insurance companies like Singlife, you will receive advice on how to buy life insurance wisely from the get-go. We will also share invaluable life insurance tips, so you can rest assured because your insurance policy will always work in your favour. Ultimately, our mission is to resolve your concerns, making the entire insurance plan buying process hassle-free.
For more information on Singlife’s life insurance plans, click here now.