Five blunders to avoid

Life insurance is an essential but difficult-to-talk-about part of adult life. Whether it’s the prospect of one’s own mortality or something else to pay for that keeps people from considering it, a life insurance policy is something that most people need. With that in mind, the “Five for the Money” column at BusinessWeek Online took a look at blunders to avoid when shopping for a policy. Mention these to clients and prospects as part of the educational process:

1. Don’t buy the wrong amount. Life insurance is income replacement for people with spouses and children to support. Make sure that need is fulfilled by the policy.
2. Don’t trust just any insurance agent – shop around. Not exactly the advice financial advisors want to hear or deliver, but those who deliver excellent service and tailor each client’s plan to meet individual needs shouldn’t need to worry.
3. Don’t be cagey. Encourage life insurance clients to tell their beneficiaries about the policies they own: the amounts, what company or companies hold the policies. The survivors need to know where to begin in the event of the policyholder’s death. Advisors who know all of the pertinent information can help, too.
4. Don’t forget, the world goes on. As difficult as it may be for some to grasp, after they die, life continues for the ones they love. Helping people face this realization may help them purchase a life insurance policy that is right for their situation.
5. Don’t depend on employer insurance. As nice as it is to have a policy through work, don’t have it be the only one. Some expire at retirement, at exactly the time purchasing a new policy could be prohibitively expensive. Others don’t cover the worker for what he needs to be covered for.

Help clients and prospects understand these points and they may just see how valuable and important life insurance coverage is. For more information, go to www.businessweek.com and visit the Investing section.