Many people don’t know enough about life insurance. As a result, they fail to get enough coverage, which can place a strain on their families after a loss. If you are someone who is interested in learning more about life insurance, keep reading to identify common mishaps that people often make and determine what steps you can take to avoid them.
Listing Your Estate as Your Beneficiary
With a life insurance policy purchase, you can choose who your beneficiary is for the death benefit. Unfortunately, placing your estate as the beneficiary of your policy hurts your loved ones. When an estate is the beneficiary, the death benefit is subject to taxation, which negatively impacts how much of the death benefit remains after taxes.
Tip: You can avoid paying taxes by designating a person as your beneficiary. Additionally, you also have the ability to designate more than one beneficiary.
Failing to Check Your Policy Each Year
Life happens, and more than likely you are placed in reactionary mode when it does. You can avoid this by updating your life insurance to reflect changes in your life as they happen. For instance, if you get a divorce, you wouldn't want your ex-spouse as the beneficiary.
Tip: When you review your policy each year, you avoid being in reactionary mode and you start taking control over your life.
Purchasing Insurance Only for Final Expenses
There are many people who purchase life insurance only to cover the cost of their final expenses. They think that anything else is profiting from their death. If you are someone who follows this train of thought, then you are doing your family a disservice. A loss of income in the household threatens your family's ability to get medical care, pay bills and put food on the table.
Tip: Work with an independent insurance agent to estimate how much insurance is necessary for your family to sustain themselves for a few years after experiencing a loss.
Not Considering Intangible Items of Value
Often in families, one person provides the entire household with benefits like healthcare. If this person passes, the family no longer has access to these benefits, placing them at a disadvantage. Too many people fail to account for the money their family needs to replace intangible items that are valuable to them. Ultimately, they purchase an insurance policy that will not allow their families to purchase these items, forcing them to do without coverage.
Tip: You can avoid this by taking your time and thoroughly assessing your financial portfolio before purchasing life insurance.
We’ll help you get the right type and amount of coverage. Call RV Johnson Insurance at (561) 745-8894 for more information on West Palm Beach life insurance.