Top mistakes for first-time life insurance buyers

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Getting life insurance is a major milestone for any adult. It gives you peace of mind and is a great way to invest on your future retirement. However, given the importance of getting insurance, there are still people who make mistakes when enrolling for a plan for the first time. These mistakes could mean paying a higher premium for unwanted or unnecessary coverage. Here are some of the top mistakes first-time life insurance buyers make.

One of the biggest mistakes one could make is buying life insurance offered to them by family members or friends. You may trust them with your life and their intentions may be good, but getting the same insurance as people close to you or offered by family and friends without knowing all the terms might not give you what you need later on.

Another major mistake is getting swept away by the terms without actually thinking if the coverage fits your situation. The best insurance plans take into consideration a person’s needs, wants, and a budget they are comfortable with. Not being able to pay monthly premiums could ruin this long-term commitment.

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Making all beneficiaries primary beneficiaries is also a common mistake. This can have major consequences as primary beneficiaries receive both benefits of your insurance policy and the burden of paying debts. If primary beneficiaries are not appointed properly, your insurance benefits could be divided unevenly and cause trouble for those you will leave behind.

Lastly, failing to update insurance plans occurs often. When new health-related issues arise, your insurance may not cover it. When these situations occur, refer back to your plan or your insurance provider.

Delos H. Yancey III is the chairman, president, and CEO of State Mutual Insurance. He is a Certified Financial Examiner, a Certified Insurance Examiner, and a fellow of the LIMRA Leadership Institute. Visit his company's website for more on information regarding services and its history.