News 441 Pitfalls Avoid Buying Life Insurance Rediff

Life insurance is an important investment for you and your family. Don't get caught making costly mistakes with your financial future. Here are four common mistakes to avoid when selecting a life insurance plan.

While it can be used as such, you should try not to treat your life insurance as a savings plan. Life insurance was meant to cover your expenses after your death and provide a source of income for your beneficiaries. If you want a good retirement savings vehicle invest in a mutual fund or annuity.

Your life insurance agent has a job to do, he is a salesman and while he may be a nice guy and know the industry well, his primary interest is to sell you a policy that will make him the most money. Sure there are a few agents out there that are in it for the greater good, but most are in it for the sale. The more you spend the more they make. Take their advice, but remember that it is your money and your future at stake, not theirs. Do what is right for your budget and loved ones.

When you purchase a life insurance policy, don't forget about it. Update it annually or at least after any major life event. You'll want to add a new spouse (or subtract an old one), add children or grandchildren, a charity, etc. Look over your policy yearly to make sure it can still meet your needs.

Buy only the life insurance products you need. If you are approaching retirement, you may not want to put your money into a high-risk policy. If you're on a budget, term life should do the trick, you may not need a bevy of riders attached at additional prices.

Read more: 4 common life insurance mistakes (Rediff.com) This article deals with four wrong reasons for which life insurance products are being bought today.