But if you have come to your senses and have acknowledged the fact that life insurance is indeed a very important thing to have to give your family the financial security that they deserve then you have taken a step in the right direction.



A February 2, 2007 article by Alex Halperin of Business Week, “Life insurance blunders to avoid," looks at some mistakes to not make when you take out a life insurance policy.

“Other than insurance salesmen, no one likes to talk about life insurance. After all, no one wants to be reminded about their looming death. However, it's hard not to suspect that keeping this subject taboo is more in the interest of insurance companies than consumers. Better informed buyers are more likely to spend wisely. And like dentistry, life insurance can't be ignored forever."

Many people are largely uninformed about life insurance because it is not the most conversation-friendly subject.

It is something that the majority of people do not want to think about or talk about. But, the fact is that life insurance is essential and the now you more about the industry, the better off you will be in the long run.

With that said, let’s take a look at some of the most common mistakes consumers make when taking out a life insurance policy.

The first mistake that many people make is buying the wrong amount of life insurance. “There are rules of thumb about exactly how much life insurance one needs, with 5 to 10 times an annual salary being a common guideline. But these numbers should be taken for what they are: very general numbers."

“‘The need that we're often talking about is an income replacement,’ says David Greene, of financial planning firm Cooper, Jones & McLeland, so that survivors don't encounter financial havoc in the wake of a loved one's death."

The next mistake that consumers make concerning their life insurance is trusting the first agent that offers them a policy. You’re best bet is to shop around.

“The life insurance options available are dizzying. Charles Massimo, president of CJM Fiscal Management, which works with wealthy clients in Garden City, N.Y., advises against limiting yourself to insurance advisers who are ‘captive’ to one company. This is doubly true for people worried about their health. Insurers calculate risk factors independently of each other, so they won't all give health conditions such as heart disease the same consideration in evaluating an application."

“‘Some [companies] are more aggressive with different risk factors,’ Greene says. A good place to compare offers from different insurers is Insure.com."

Also, don’t think that the policy that you get from your employee is going to be comprehensive enough.

“When asked about life insurance, it can be easy to choose a policy provided by an employer with the premium deducted from a paycheck. But those policies can often provide a false sense of security. Among their other problems, they sometimes expire at retirement, when buying a more comprehensive policy could be more costly. Worse, group life insurance is less tailored to an individual's health and needs."