Here are four mistakes you don’t want to make, as they can hurt your life insurance coverage.
Waiting too long to buy insurance.
When people are young and healthy, life insurance is usually one of the last things on their mind. What they probably don’t realize is that this is the BEST time to purchase life insurance coverage.
Buying life insurance sooner, rather than later, can work in your favor if you want to secure a policy at the lowest price possible. Rates are cheapest when you’re young and healthy and then increase over time. The longer you wait to take out life insurance, the more costly it will be.
Buying the least expensive policy.
Another mistake that people make is choosing the cheapest policy. You’re feeling good, so why not compromise and get cheap life insurance? While some life insurance is better than none, opting for the least expensive option is not always best.
Instead, meet with a financial advisor in NJ who can go over your options for term and permanent life insurance. Even if one plan looks more expensive, it might actually turn out to be more cost-effective in the long run.
Overlooking the investment portion of the insurance.
One of the great features of permanent life insurance is that it includes an investment feature called cash value. This portion of your policy earns interest and may be available for you to withdraw or borrow one day.
To build up this account, part of your premium goes toward the cash value each month. As long as you make your monthly payments, your policy will stay active, providing you with both life insurance coverage and cash savings.
Borrowing from your policy when you don’t need to.
While it’s certainly reassuring to have some money put away, you don’t want to borrow it for just anything. If you take too much money out, your policy can lapse and you will no longer be covered. Not to mention, you can significantly decrease the death benefit that’s available to your beneficiaries.
Of course, this is not to say that you can’t borrow against your life insurance policy - it is yours after all. But, it’s important to be aware of the potential consequences that can occur if you do withdraw money.
These are four common mistakes that people make all the time, but it can end up hurting them in the long run. To discuss life insurance in New Jersey, contact Leonard Financial Solutions today. One policy can give you life insurance coverage and an investment!