3 Life Insurance Mistakes that Can be Easily Avoided

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 Life insurance seems a bit of a complected topic for some people, and some don't tend to look much into details and analyse what they are buying. In the current American social welfare system, life insurance plays a particularly significant role as it can financially protect a family in a case of a death of their bread winner. We outlined three common mistakes that are dangerous, yet can be easily fixed. 

1. Having insufficient insurance 

According to Bankrate.com 37 percent of parents with children under 18 do not have any life insurance.  From those parents who do, the half has a coverage of less than one hundred thousand dollars. It can be easily fixed and many policy terms currently are quiet cheap. Usually experts suggest that you need to analyse you life insurance terms and make sure that it can cover burial expenses, replace your income for the family, and pay different kinds of debts you have. You will most probably have to pay a little bit more, although the security costs way more. 

2. Not checking the medical records before applying 

It would be a good move for you to request your medical record from your physician and bring it for a review to your life insurance agent. They can be used to evaluate your risks more precisely and determine more suitable rates. You should not forget that life insurance companies' main purpose is first of all to make money. They should be sure they don't make bad investments, so they are more likely to underestimate your health rather than overestimate it. That is why bringing medical records for evaluation can help decrease your life insurance term rates if the company finds out that your health is better than they expected. 

3. Blindly looking for a way to avoid estate taxes

You can have someone else own your life insurance policy, so that when you die the policy would not be a subject to estate taxes. But, there is a so-called "three corner life insurance" that make things pretty tricky. Let's consider a situation where your spouse owns a life insurance on you, but the beneficiaries are your children. You may think that you are avoiding the estate taxes, however, using three-corner life insurance turns the proceeds from the insurance into a gift for your children. FYI, gift amounts over annual $14,000 are taxable, and would reduce the owner's annual lifetime exclusion. Check cornerstones with an attorney before you mess up.