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April 1, 2024

Investing in life insurance is one of the best things that you can do to protect your loved ones in the event of your death. It can provide an income for your surviving spouse, ensure that your children’s education is covered, and even help you leave a legacy for your favourite charity or social cause.  

But buying life insurance can also be complex and confusing. There are different types and a whole array of options that you can include with each version of your policy. So naturally, there are going to be some potential pitfalls.  

If you are looking into life insurance, here are a few common mistakes that you should avoid:  

  1. Waiting too long to purchase life insurance.  

Young adults often make the mistake of thinking that they have all the time in the world to purchase life insurance. Or they reason that they don’t have enough assets – or a family yet – and therefore owning life insurance isn’t that important yet.  

But life insurance is never more affordable than when you are young and healthy. The older you get, the more expensive it will be to purchase life insurance. Additionally, a major change to your health could also make life insurance more expensive – and for some types of insurance, this can even make you ineligible.  

  1. Assuming that you won’t qualify. 

If you have a health condition or you are older, you may assume that you won’t qualify for life insurance. But don’t let this assumption stop you from speaking to your insurance broker if you need to coverage.  

There are life insurance options specifically designed for harder to insure individuals. These options may cost more, but they can give you the coverage that you need.  

  1. Focusing too much on the cost of premiums. 

While you do need to select a policy that you can afford, you won’t be doing yourself any favours if price is your main consideration. For example, a Term 10 life insurance policy will likely be your cheapest option – however if you have a young family you want to support or a mortgage you’d like to cover, then this won’t be your best option. At the end of the ten-year term, it will be much more expensive to renew your policy – and you may find that you would have been financially smarter to go with a longer-term policy or a permanent policy.  

  1. Buying too little coverage. 

The more life insurance coverage you buy, the more you will have to pay in premiums but this doesn’t mean you should skimp. Working with your life insurance broker, you can determine how much coverage you are likely to need to meet your goals – whether your goal is simply to cover final expenses or whether it’s to ensure your children are cared for until they reach adulthood.  

There are also other add-ons that you should discuss with your broker. For example, if you are just starting out in your career and likely to earn more in a few years, you can add on an option that will allow you to purchase additional insurance at set time intervals without a health check. You may also have the option to include a child rider that will cover any children you have.  

  1. Fibbing on your life insurance application.  

When you apply for life insurance, you are going to have to answer a lot of personal questions about your health and about your lifestyle. In some cases, you may feel a little embarrassed or tempted to fib because you’ll feel that providing an honest answer may affect your underwriting.  

And while some health conditions and lifestyle habits will in fact, affect your premiums, lying on your application can lead to it being revoked, or (if it is discovered after your death), having your claim denied.  

Contact ICD Insurance today 

If you are ready to invest in life insurance, our brokers are ready to help you avoid these and other pitfalls. Call us today to learn more.