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Life Insurance Is Important But What Plans Do You Need To Avoid?

life-insuranceNobody knows when their number is up, and that’s why life insurance is essential. Caring for your family after you’re gone should be one of the most important decisions when evaluating your finances, and although it may not be one of the best conversations to have with your loved ones, taking out the right policy could be the difference between a financial windfall and an expensive burden.

Although everyone should consider taking out life insurance, there are two kinds of people that absolutely must be insured against their death. Firstly, if you have an estate large enough to be subjected to estate tax, then taking out life insurance is very important (however this does not apply to many individuals). Furthermore, if your death would result in your family being placed with a financial burden, for example funeral costs and debts in your name, then this is another case where life insurance is very important.

There are many types of life insurance policies available that will cover these two types of circumstance, but there are also many more that consumers need to steer clear of. Here are some of the top life insurance plans that don’t make financial sense, and that you need to avoid.

Guaranteed Issue

If you’re a fan of late night television, then you would have certainly seen some guaranteed issue life insurance policy adverts. One of the biggest selling points these adverts state, is that there is no way you will be turned down if you apply. This might seem like a no-brainer on first glance, but if you look a little deeper, these policies don’t actually hold any water.

Firstly, if you buy a guaranteed issue life insurance policy and die within two years, policy will only return the premium you paid to take it out. Furthermore, the death benefits for guaranteed issue policies are notoriously low as well as expensive. If you’re looking for an alternative to guaranteed issue life insurance policies, have a look into senior term life insurance.

Life Insurance For Children

Not only is life insurance for children a huge waste of money, but seeing as they don’t earn an income or hold any estates, then they haven’t really got anything to insure. Not buying life insurance for your kids proves that you are smart enough to put your money towards a college fund or saving account for when they’re older.

Travel and Accident Insurance

There’s a good reason why travel and accident insurance is so cheap, so don’t be coerced into buying a policy every time you travel. If we compare the amount of people who travel, to the amount of people who actually get injured on the way to, or at, their destination, the numbers are miniscule. If you’re already covered by life insurance, why would you need extra cover on holiday? Furthermore, a life insurance policy would always be more lucrative than a travel insurance policy anyway! Always be vigilant when considering accident or travel insurance policies.

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