Following on from our previous post, here are some more common mistakes with life insurance policies.
Life insurance mistake 1 – Allowing ‘sticker shock’ to stop you getting life insurance
Yes, life cover is a significant bill each year; you can’t quite cover it by giving up one weekly cup of coffee. However, life cover has immense value to your family … and the best things in life certainly aren’t free!
Life insurance mistake 2 – Not completing the application yourself
Many families have one partner that is the ‘paperwork partner’, responsible for filling out forms and that sort of official business. However, application questionnaires get personal – very personal! Given the gravity of the consequences if somebody else fills out your form and it isn’t quite right, it is essential that you be highly involved in filling out your own application. This is important because you need to satisfy the insurer’s ‘Duty of Disclosure’ when completing the application for a life policy.
Life insurance mistake 3 – Contributing to life insurance at the expense of superannuation
These two financial products are equally important, but very much separate contributions to your and your family’s lifestyle in the future. There are different tax advantages with each, and it is smart to devise an investment strategy that allows you to maximize your contributions to both. Doing this rather than trading off between life cover or superannuation will generally create the best outcome for your lifestyle.