Top 5 fatal mistakes that people make when taking out insurance policies.

1. Buying a policy without shopping around.

Most people make the fatal mistake of ruching to take out policy claims without comparing quotes. You must also check the financial strength rating of the company where you are taking out your policy. Try to avoid fly by night companies that might end up closed and you losing your hard earned money.

2. Choosing the wrong type of life policy.

Life insurance can be in two parts, there is that which covers a specific period say 20 years and it covers for that period only. There is however, permanent life insurance which is a better option especially for those with lifelong financial dependents.

3. Being secretive about your policy

Some people make the mistake of keeping their life insurance a secret. Someone needs to know so that a beneficiary can make a claim. Review your coverage after major life events such as marriage,divorce or having a new addition to your family.

4. Lying

Do not put false information on your policy papers as this may impact in the pay out. Some people are not candid with information and often put false things. This will pose problems when it is time to claim.

5. Naming a minor as a beneficiary

This is totally a bad idea. Your policy will not pay out to a minor until the court appoints a guardian. This process is costly as it involves attorney fees and might take time. Rather nominate your spouse or a trusted adult as a beneficiary.