Common Life Insurance Mistakes You Might be Making

August 8, 2018

National Financial Awareness Day on Aug. 14 often sparks discussions of investing, cash flow or debt management. However, there are other financial topics often overlooked that are just as critical to your family’s financial health and long-term prosperity. One such topic is family risk management.

Managing risks for your family is a key part of wealth management. Identifying gaps in insurance coverage – particularly life insurance – and routinely looking for new risks should be discussed with your advisor as they build your financial plan. You can’t adequately grow wealth without protecting it, and more importantly, you won’t know with confidence that your family can maintain its quality of life without you until you review your insurance policies.

These are the top four mistakes we see clients make when it comes to life insurance:

  • You overlook a non-working spouse. Spouses who don’t work outside of the home should still have life insurance coverage. They contribute to the function of a household in numerous and significant ways that if, God forbid, something were to happen to them, you’d incur additional expenses to cover their workload.
  • You assume life insurance through your employer is sufficient. Even if your employer offers a great policy, keep in mind that it’s not portable if you change jobs and your new employer may not offer this benefit. It’s wise to explore a life insurance policy on your own, separate from what an employer provides.
  • You don’t secure it early enough. When you’re young and healthy, you can lock in health rates for convertible term policies.
  • You aren’t properly insured. More often than not, we see clients who are under-insured. However, it’s certainly possible to be over-insured, too. Review your policies closely with your financial advisor to ensure you have sufficient – but not excessive – coverage.

Your financial health doesn’t simply depend on your income, expenses and investment portfolio. Financial security means you’ve properly planned for the future – expected expenses such as higher education and retirement as well as the unfortunate and unexpected.

 

Blog by Chuck Lipps, Wealth Advisor.

 

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