Buying life insurance is some serious adulting. Trust us when we say you won’t regret it — no matter how old you are!

Avoid these 10 mistakes people make when buying life insurance and get the most from your life insurance. We did the research so you don’t have to.

10 Mistakes People Make When Buying Life Insurance

Here’s a 10-point guide to making the most of your life insurance policy and how to find the right life insurance coverage for you:

1. Relying on Group Life Insurance from an Employer

Don't rely on Group Life Insurance from an Employer

If your employer offers group life insurance as a benefit, congrats! But here’s the bad news: group life insurance is likely not enough.

That’s because group life insurance coverage is pretty basic — and if your wardrobe is any indication, you avoid “basic.” Typical group life insurance covers only 1x or 2x times your annual salary. We’re sorry to say, that’s far from adequate!

How much life insurance you need is based on your annual salary and how long you have until retirement.

To figure out how much life insurance you need, estimate 6x to 10x your annual pay. Or instead, multiply your salary by the number of years you have left until retirement.

Let’s see…carry the one. That’s a big number!

Plus, your employer’s group life insurance policy is subject to change should you leave the job, or simply at your boss’ discretion.

2. Buying a Policy Too Quickly

Just like a Tinder match, it’s best to not take the first life insurance policy you come across, or to do business with the first insurance company you approach.

That’s because the monthly premiums on a life insurance policy can vary — a lot! — and for pretty similar coverage.

Check this out: There are a number of factors that go into a monthly life insurance policy premium, including age — the younger the better — gender, health record, and even the state you live in.

Premium costs can also vary between life insurance companies. For these reasons and more, it’s best to shop around!

And be sure to check the financial strength rating of the company you go with. A rating agency like A.M. Best is a great place to start.

3. Buying the Wrong Type of Life Insurance

There are a few different kinds of life insurance policies, and before settling on a plan it’s important to understand which one is best for you.

Here’s what you need to know:

Term life insurance, covering a specific period of time, is sufficient for most people and it’s also quite affordable. Depending on how old you are, and a few other factors, it’s possible to get up to $1 million in term life insurance coverage.

Whole, universal, or permanent life insurance does just that: insures you permanently, for the rest of your life. For this reason, it’s a lot more expensive. On the bright side, these types of insurance policies have an investment component, gaining value over time.

There are other pros and cons associated with each kind of life insurance policy, so do your research.

If you have dependents, or if you anticipate leaving behind an estate, whole life insurance is likely the best way to go. Be sure to consult an insurance industry expert before making your decision.

4. Not Buying Enough Life Insurance

Once you’ve settled on the type of life insurance you need, “How much life insurance do I need” is the next question to answer. Buying an insufficient amount of life insurance is a common mistake people make.

There are a few different ways to calculate how much life insurance you need — some of which we’ve already mentioned. Those methods will get you close.

Another popular way to get the right amount of life insurance for you is called the DIME Method, or Debt, Income, Mortgage, Education.

But do you have a pencil and paper, or maybe a calculator up on your phone? Good, coz you’re gonna need it.

Begin by adding up the following:

Debt: Student loans, credit card debt, among others.
Income. But not just income, income multiplied by the number of years you have left until retirement, or until your kid turns 18. Maybe more.
Mortgage. Yep, you’re gonna have to add your mortgage to the total.
Education. And finally, an estimate of how much you’ll spend on your children’s education — tuition plus room and board, etc.

And that should get you close to how much life insurance you need.

Careful, though, because this method can sometimes lead you to overbuy your insurance so consult with a financial advisor, or use an online life insurance calculator to check your work.

5. Buying a Policy Without Telling Anyone

Tell family members or business partners if you buy a life insurance policy.

Now, why would you want to keep your life insurance policy a secret? Turns out, it’s surprisingly common.

Sometimes people don’t want to talk about their net worth or bring up mortality at the dinner table. Truth is, though, it’s not only crucially important to buy a life insurance policy, it’s important to tell those closest to you that the policy exists — including family members and business partners, but also financial advisors and legal representation or even an estate planner.

That way, they won’t be blindsided should the unthinkable happen.

6. Naming a Minor as a Beneficiary

Don't name a minor as a beneficiary for your life insurance.

This next one is only relevant if you have children and if you do, you might be thinking, “Wait, isn’t life insurance for your children?”

Yes, having children is a primary motivator for purchasing a life insurance policy in the first place.

But if your kids, stepkids, or even grandkids for that matter — really anyone who may still be a minor at the time of your passing — are named as a beneficiary, courts won’t pay out to them.

Instead, they’ll first name a guardian to award the benefit to, and this can be time-consuming, expensive, and most importantly, completely out of your control.

In instances like these, it’s best to name a trusted guardian or adult as a beneficiary rather than a minor, or instead, set up a life insurance trust for your children.

This way, you can name the trust and trustee as the beneficiary, and even stipulate how you’d like the money to be spent.

7. Naming Your Estate as the Beneficiary

Don't Name Your Estate as the Beneficiary for Life Insurance

On the topic of a life insurance trust, many name their estate as the beneficiary of their life insurance policy. This is a mistake.

Naming your estate as the beneficiary will lock the whole process up in probate and it can take months, sometimes even years if things get complicated, to sort all that out.

Then, and only then, will funds be dispersed.

What’s also risky about naming your estate as a beneficiary is that, while in probate, your death benefit will be at the mercy of creditors who are after monies owed on any remaining debt at the time of your passing.

Otherwise, life insurance pay-outs are typically immune from creditors.

8. Forgetting to Update Your Policy and Beneficiaries

Don't forget to Update Your policy and beneficiaries.

Because life happens, it’s generally recommended that life insurance policy-holders check back every few years to make sure coverage is still adequate. In terms of the amount of life insurance, but also the proper beneficiaries.

For example, just because you were without children at the point you purchased the plan, if you have kids, you’ll need to add them to the policy.

And children aren’t the only life change you’ll need to let your life insurance advisor know about. Other updates include:

Divorce
Starting a business
Marriage or remarriage

And if you’re buying a policy while you’re young — as you should, it’s cheaper! — listen up: Some life insurance companies won’t let you make changes to your policy once you pick a plan.

If you’re older, this may be less of an issue. But if you have lots of life left to live, make sure your life insurance will grow right along with you. And for best results, check in regularly.

9. Keeping Information from Your Doctor

another common mistake many people make when buying life insurance is keeping important information from their doctor, or not answering health questions truthfully.

Although some online life insurance companies don’t require much of a physical — sometimes none — chances are, if you want life insurance you’re going to have to get to see the doctor.

And when you do, you’ll most certainly be asked a lot of questions about your health and medical history by whichever insurance company you choose. It’s pretty hard to avoid.

Because of this, another common mistake many people make when buying life insurance is keeping important information from their doctor, or not answering health questions truthfully.

Your answers in this part of the process and the results of your medical exam play an important part in the underwriting process, relating directly to how much coverage you need, and the rates you’ll pay for the policy, including monthly premiums.

Typically, life insurance companies questionnaires include the following:

Hobbies
Prescription drug history
Driving record

This information will sometimes be gathered from third-party sources, as is often the case with online life insurance providers, or through a medical exam.

Life insurance health exams also include the following:

Height and weight check
Blood pressure and pulse
Blood draw and urinalysis

Before your exam, it’s a good idea to avoid caffeine and alcohol, and limit sodium intake.

If you do withhold something on the questionnaire, or in your medical examination — which is really pretty hard to do — the insurance company may not pay a claim should the worst come to pass.

Also, don’t assume just because you have a few blemishes on your medical record that you can’t get health insurance, or that you’ll end up paying a lot for a policy.

If you’re a smoker, for example, be sure to shop around because some life insurance rates for smokers are better than others. Most importantly, don’t assume you’ll be denied coverage just because you like a cigarette or two.

10. Procrastination

Don't procrastinate on buying life insurance.

And finally, procrastination is one of the most common mistakes people make when buying life insurance. Assuming you’re too young for life insurance, or that you’ll get a policy once you lose weight or start exercising, or in other words, when you get “healthy,” means you could end up paying more for your life insurance coverage.

According to recent research from the Life Insurance Marketing and Research Association (LIMRA), nearly half of all Americans put off buying the life insurance they know they need, primarily because they’re intimidated by the process. Following that, 4 in 10 of those with life insurance wish they’d purchased a policy sooner, according to LIMRA.

The best and most affordable time to buy life insurance is when you’re young. You’ll never be healthier than you are right now, and purchasing a policy as soon as possible will help you lock in lower premiums and better coverage.

This way, you’ll be able to make the most of your life insurance policy as time goes on.

10 Mistakes People Make When Buying Life Insurance: Conclusion

Buying life insurance is a big decision. Many young people put it off, but locking in good rates while you’re young and healthy gets you lower premiums and better results.

What this means is there’s no time like the present to buy a life insurance policy! When shopping for life insurance — either online or in-person — avoid the following mistakes: