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How many mistakes did you make when you bought your life insurance? In Oops, You Bought The Wrong Protection, we uncovered five everyday mistakes which people make when buying life insurance. In this article, we continue the same there with another five hazards to watch out for: 6. Tell the truth If you tell fibs to your life insurer, or omit to tell it crucial information about your health, then you may as well not bother buying a policy at all. If you fail to disclose all relevant information to your insurer about your medical history, current state of health, and habits (such as drinking and smoking), it may refuse to pay out when you die, on grounds of "non-disclosure". So, don't hold back: be honest and tell your insurer everything, even providing details about relatively minor health issues. This way, you can be safe in the knowledge that your policy won't let you down because of careless or deliberate non-disclosure. 7. Do you need a lump sum or an income? If you're buying life insurance to cover a debt, such as a mortgage or personal loan, then you need a policy which pays out a lump sum when you pop your clogs. However, do you really need to pay for a policy which drops a lump sum in your spouse or partner's lap on your death? A cheaper alternative is to buy Family Income Benefit (FIB), which pays a pre-determined tax-free monthly income for a set period, which is ideal for working people. Monthly premiums FIB can be half those of a comparable lump-sum policy, making it cheap and cheerful, yet valuable, protection. You could even buy more cover and yet still pay lower premiums! 8. Don't forget housewives and househusbands As this article reveals, the financial cost of replacing the work done by a stay-at-home mum or dad comes to around £24,500 a year, or £2,000 a month. So, don't assume that someone doesn't need insuring just because they're not at work. If losing them would cause you or your family financial hardship, then make sure that they are covered! 9. Don't forget the add-ons When you're buying life insurance, take the opportunity to review your other requirements, such as income protection (long-term sickness cover) and critical illness insurance. It may be cheaper to buy these policies with your life cover, although, more often, it pays to buy them separately. Also, look out for "waiver of premium" protection, which will meet your monthly life insurance premiums if you're too ill to work. 10. Don't sit back and relax Sorry, but we're not done yet! The problem with life insurance policies is that they are long-term contracts, so, unlike home and motor insurance policies, they don't renew every year. Hence, it's easy to "buy and forget" about life cover, which could mean that you overpay for, say, 25 years or more. If you're in good health now, you may be able to find a cheaper policy, even if you bought your existing protection several years ago. So, be sure to "re-broke" your policies every couple of years, just in case you can buy more protection for the same amount, or pay lower premiums for the same cover. Well done for reading this far: armed with these ten tips, you're now an authority on life insurance! More: For quality quotes for life, home, motor, health and travel insurance, visit our Insurance centre! Many thanks to Kevin Carr at LifeSearch for his help with this article.
