Top Mistakes People Make with Life Insurance (and How to Avoid Them)

Life insurance is a powerful tool for protecting your family and securing your financial future, but it’s easy to make mistakes that reduce its effectiveness. By understanding the most common pitfalls, you can ensure your policy delivers the protection you intended.

1. Not Buying Enough Coverage

One of the most common mistakes is underestimating how much coverage your family needs. Expenses like mortgages, education, healthcare, and retirement costs can add up quickly.

How to avoid it: Work with a retirement planner to calculate your family’s financial needs and choose coverage that provides sufficient protection.

2. Letting Policies Lapse

Life insurance only works if it’s active. Missing premium payments or letting policies lapse can leave your family unprotected when they need it most.

How to avoid it: Set up automatic payments and review your policy regularly to ensure it remains in force.

3. Ignoring Beneficiaries

Failing to name or update beneficiaries can create confusion, delays, or unintended distributions. Changes like marriage, divorce, or the birth of a child require updates.

How to avoid it: Review your beneficiary designations at least every few years or after major life events.

4. Overlooking Policy Options and Riders

Not taking advantage of available riders—like long-term care, accelerated benefits, or waiver of premium—can mean missing opportunities to enhance your coverage.

How to avoid it: Discuss policy riders with a retirement planner to see which options best meet your needs.

5. Waiting Too Long to Buy

Some people delay purchasing life insurance, thinking it’s only for younger families. Waiting often results in higher premiums and limited options, especially if health issues arise.

How to avoid it: Consider purchasing life insurance sooner rather than later to lock in lower rates and secure coverage while you’re healthy.

The Bottom Line

Life insurance is most effective when thoughtfully chosen, regularly reviewed, and aligned with your family’s evolving needs. Avoiding these common mistakes ensures your policy delivers the security and peace of mind you intended.

Talk with a retirement planner today to review your coverage and make sure your life insurance strategy is working as hard as you do.