4 Common Mistakes in Choosing Life Insurance
4 Common Mistakes in Choosing Life Insurance
Many people are doing mistake in choosing and buying life insurance. As the result, they buy premium insurance which is so expensive but the benefits are far from expectation. How to choose the best life insurance? In our country, the owner of the mobile phone number is far more than the owner of a life insurance. Less than 10% people have insurance compared to 90% of people who own a mobile phone. Family protection does not seem important in many people. For them, gadget is more important. Naturally the quality of financial literacy is not too high, according to the survey.
Life insurance is the foundation of a healthy family finances. According to data from the Central Bureau of Statistics, 9 of 10 women in our country depends their lives on their partner. The survey finds that 60% of wives whose husbands died have lower standard lifestyle. Many people do not want to buy life insurance because they have the perception that buying insurance is expensive and wasteful.
Just choose the right products, life insurance premium is unnecessarily expensive. The most important thing is the time to buy and choosing the right life insurance. Mistake in purchasing insurance is for example, paying too expensive insurance premiums, or buying products that are not needed. Here are some mistakes done by most of people in choosing life insurance.
The first mistake is not aware about the compensation and insurance coverage. The compensation is a benefit paid by the insurance company if the insured (eg husband or wife) died. How much is your compensation? Hopefully you remember. Many people do not know or cannot remember how the sum insured in the policy. In fact, the purpose of buying insurance is to protect their future. It’s important to make sure that you buy insurance according to your needs. Therefore, the sum insured should be a major concern when you buy life insurance. The value should be large enough, in line with the estimated cost of family life.
The second mistakes is too much doing focus on investment, not protection. Many people who buy life insurance more focus on the value of their investments. Understanding how the value of the sum insured is not considered, whether fairly or not to protect the beloved family. It is true that the value of investment will be added to the sum insured if the insured dies. However, we must remember that: investment is uncertain depending on the performance of the chosen instrument. In life insurance, if you choose a shorter premium payment, the value of the investment will be cut to pay for the cost of insurance premium. Therefore, although there is investment value, which can add to the sum insured, its nature is uncertain. The certain thing is the insurance amount. That’s the amount guaranteed by the insurance company.
The third mistake is less aware in buying life insurance. If the beginning states that not having a life insurance is bad, how could having life insurance bad too? The problem is that not everyone needs life insurance benefits. We first understand the purpose of having a life insurance policy, which provides benefits (to the beneficiary if the primary insured dies.
That is, there are people whose lives depend on you financially, for example, a wife, a child or parent, that if you die, they will face financial problems due to loss of income sources and need financial protection provided by life insurance. In other words, if there is no person whose life depends on you financially, there is no point to have insurance. It is better if the money to pay the premiums is allocated to the more important and necessary other things today. One of them is the pension fund. You certainly need money for retirement. According to the survey, the number of our society who has a pension plan is still very minimal. Although relying on retirement from office, the numbers are not yet sufficient. A fuller explanation on the pension fund office is not adequate. According to the survey, people still rely on financial assistance from the child when they retire.
The fourth mistake is wrong in writing insured. In life insurance, the insured is the notion that if he dies, the insurance company will pay the sum assured. Determination of the insured is not uncommon less precise. In this case, it is the husband, who is the main breadwinner, should have protection. If he is not being insured, the implication, if the husband dies, the source of income will stop, the family will receive financial protection of insurance.
Insured is a party that should provide a source of income to the family. It can be a husband and wife, as long as earnings. Ideally a family has two life insurances for the husband and wife. Many people are just buying one. It is for the husband considered to be the main breadwinner. This perspective is not right. If you are not able to buy two life insurances, choose the most substantial income. Therefore, it could be a husband or wife. Life insurance is important in family financial planning. It provides protection for the family. However, many people make mistakes in choosing life insurance. Make sure you do not make mistakes described above.