Getting life insurance is a smart financial move. But it’s easy to get it wrong if you don’t know what to watch out for.
What are the most common mistakes to avoid when getting life insurance? And how do you prevent them?
This guide breaks it down. Whether you’re buying your first policy or updating an existing one, ensure you’re not making these common mistakes.
Choosing the wrong type of policy
One of the biggest mistakes is failing to understand the differences between policy types.
- Term life insurance covers you for a set period, like 20 or 30 years. It’s usually cheaper.
- Whole of life insurance lasts your entire life and guarantees a payout, but it costs more.
Choosing the wrong one could mean paying more than necessary or not having the right level of protection.
Getting too little cover
It’s easy to underestimate how much your family would need if you passed away. Think about:
- Mortgage or rent
- Debts and loans
- Childcare and school costs
- Household bills
- Funeral expenses
That’s why it’s important to ask for help when taking out cover, our specialists can help calculate the right amount of cover for you. A payout that seems big today might not stretch far in real life.
Relying only on work benefits
Your job might offer some life cover, but it’s often basic. And if you leave the job, you lose it.
Having your own policy means you’re protected no matter where you work. Plus, if the worst were to happen, your loved ones would get the money from two policies, rather than one.
Not putting your policy in trust
Placing your policy in a trust means your payout can be distributed directly to your loved ones. It avoids probate and can help reduce inheritance tax.
Many people skip this step, but it can make a big difference. We have our own trust team here at IGotCover and we can set your trust up for you, at no extra cost.
Hiding information on your application
If you lie about your health, smoking, or medical history, your insurer can refuse to pay out later.
Always be honest. It might raise the price slightly, but at least your policy will do what it’s meant to.
Forgetting to review your policy
Your life changes. So should your insurance. Review your policy after:
- Having a child
- Moving house
- Getting married or divorced
- A significant change in income or debts1
Please don’t set it and forget it. Ensure it still meets your needs. At IGotCover, we have our own dedicated review team, they will contact you every couple of years after you have taken out cover to ensure your policy still meets your needs.
Cancelling your policy without a plan
Money gets tight. We get it. But cancelling your life insurance without having another solution can leave your family at risk.
Speak to your broker first. They might help you reduce the premium or switch to a more affordable option.
FAQs
Do I need to disclose my past health conditions to my insurer?
Yes. Full disclosure is key. It helps ensure your policy pays out when you need it to.
Is it better to get a longer policy term?
It depends. A longer term costs more, but offers more security. You can also review or extend your policy later if your needs change.
Can I have more than one life insurance policy?
Yes. Some people stack policies to fit different life stages or goals.
What happens if I stop paying premiums?
Most policies will end, and you won’t get a refund. If you’re struggling, speak to your insurer before cancelling.
Final thoughts
Life insurance isn’t complicated, but the wrong decision can cost you.
Avoid the common mistakes. Pick the correct type of cover. Be honest. Keep it up to date. And don’t forget about trusts.
Done right, life insurance gives you peace of mind and gives your family a safety net when it matters most.
Get the right advice from one of our specialists today!
