Life Insurance can be an important part of estate plans. However, many mistakes can be made concerning it.
Life insurance is a possible solution that can solve both these problems. However, mistakes are often made, as Wealth Management discusses in "Eight Life Insurance Mistakes Clients Make."
Common mistakes include:
· Not buying life insurance at all, when people have good reason to do so.
· Buying too little coverage to meet the expected needs of minor children.
· Many people purchase the wrong type of coverage for what they need.
· Just getting life insurance from their current employer's benefit plan, instead of shopping around and then leaving jobs and losing coverage.
· Not purchasing any coverage for stay at home parents, since the breadwinner will need to take more time off work, should anything happen to the other spouse.
· Purchasing a policy that only offers coverage until children reach the age of 21, instead of funds for college and when getting started in their careers.
· Not creating a trust to handle any payouts, after a child reaches the age of 18, especially when the child is still too young to manage it.
· Canceling a policy as soon as possible, before making sure the child will not need it, if something happens to the parent.
Reference: Wealth Management (May 25, 2018) "Eight Life Insurance Mistakes Clients Make."