9 Common Mistakes First-Time Life Insurance Buyers Make and How To Avoid It

1. They buy life insurance because they are being offered by their friends or family (buying with no definitive reason).

Life insurance is an important part of a financial foundation for any person or family.  It should be bought for a definite reason and not just because it’s being offered by a friend or family.

It is also the same with agents offering a policy for their friends or family.  The level of quality of service and explanation should be the same with each client whether family or not.

The problem with too much familiarity is that both client and agent forget why they are buying and offering the products in the first place.

For clients – buy because you need it for your WHYs.
For agents – offer because of your client’s NEEDS and not your needs.

How to avoid this:  Make sure you base your decisions on what policy to get on a certain financial goal for yourself or your family.


2. They get insurance that is not fitted to their needs/objective.

This can be attributed to a poorly skilled agent.  The agent should be able to guide their clients on getting the best plan for their clients based on the following:

   – needs
   – wants
   – budget

How to avoid this:
Read these posts below.  These posts will show you how to pick the best agent for you.
5 Insider Tips on Finding the Right Insurance Agent/Financial Advisor for you
Doctor’s Biggest Mistakes in Choosing a Financial Advisor


3. They fail to incorporate it into their budget and ended the policy by not being able to continue paying and ultimately lapsed the plan.

For some, they buy in good times; they don’t think that paying for the insurance plan is usually a long-term commitment.  Eventually, their plans will lapse for not being able to pay it on time.

How to avoid this:
Always think long-term.

Ask yourself:
–    Will I be able to continue paying this plan for the prescribed period of time?
–    In 3 to 5 years, or 10 years or your entire life, can I be able to maintain it?

If you answer yes, then go ahead.  Do it now. If the answer is no, then think again.


4. Failing to understand and remember how long will you be paying for your policy.

There are 2 types of policies according to the length of payment:

The payment period is limited to a specified period of time. It could be 5 years to pay, 10 years to pay, 15 years to pay, or so on and so forth.

Advantage:  You will only pay for a period of time but the benefits could be a lifetime (depends on the plan you get).

Disadvantage:  The shorter the period, the more expensive it is compared if you are paying for a longer period of time.

Regular pay is the oldest type of payment system.  Your grandparents or parents have this type of insurance policies.
REGULAR PAY – means you are going to pay for the plan forever.  While you are alive.

What if you want to stop?

There are only 2 options for regular pay in case you want to stop paying.
1.    When your plan can be able to avail self-liquidating option; or
2.    It has a lot of fund value that it can avail the premium holiday.
In both cases, this may take a lot of years before it can reach this level. Maybe 20 years or so.

How to avoid this:
Make sure you have chosen the plan which you are ready to pay for the whole duration it is intended to be paid.  Don’t trust so much on the self-liquidating option in a regular pay since the time for this to happen is usually not guaranteed.

5. They fail to place all the insurance protection they can and will definitely need in their first policy.

I heard this story from a testimony of a client.

She was an aspiring lawyer. When they were taking their bar exams, there was a blast.  Suddenly she felt weak and knocked out.  She woke up in the hospital and her foot was already amputated.  It turns out she was a victim of a bombing incident.

Luckily, she had a life insurance policy.  They contacted the agent, but upon looking into her plan, they failed to attach a “comprehensive accident insurance” – that one feature that can give her cash and help her in that situation.

How to avoid this:
Make sure your first policy has all the protection features you can possibly put in there, especially these living benefits:
– Critical illness benefit,
– Disability waiver (payments are waived in case you become totally or permanently disabled), and
–  Comprehensive accident insurance.


6. They make all their beneficiaries their primary beneficiaries.

This is a real story:

Father of 2 died, he only has a 300,000 life insurance policy.  He died because of liver cancer.  He left her wife a widow, and his 2 grownup sons orphaned, and a big amount of hospital bill, around 300,000.

His primary beneficiaries are the 3, his wife and 2 sons. Being all primary beneficiaries, the 300,000 will be divided into 3.  So, they gets 100,000 each.  The mother, hoping that the 300,000 can pay their hospital bills, came to her agent and asked for help.  His sons wouldn’t give her their shares in the policy, leaving the old widow with 200,000 hospital debts and other funeral expenses.

How to avoid this:
Make sure that those people whom you will make primary beneficiaries will take care of your debts and final expenses and not keep the money for themselves.  If you are in doubt, just make 1 primary beneficiary and others as contingent beneficiary.

Contingent beneficiary – will only get the money once the primary beneficiary is no longer around.


7. They fail to update or upgrade their life insurance policies.

Our needs change depending upon our lifestyle and circumstances.  Your wife and children may not like it that when the time you need your life insurance in cases of death, you only have 100,000 life insurance coverage, which you got when you were just starting out.

How to avoid this:
Make sure that you do regular reviews of your policies.  Do necessary upgrades every 1-2 years and take into consideration inflation while planning.

Also work on your updates/upgrades especially when you:

– Get married
– Whenever there’s a new baby (new dependent)
– New lifestyle upgrade
– Increasing net worth (estate planning purposes)

8. Failing to get insurance when you are young and healthy.

I have encountered a lot of first time insurance buyers in their late 40s, 50s or even 60s. Problem with these ages are usually, they already have health-related issues where they can’t get insurance anymore at the standard rate.

How to avoid this:
Read more here.
When is the Right Time to Get a Life Insurance Policy?



9. They don’t take time to know and remember the benefits of their first policies.

Getting your first policy is a milestone and part of your financial foundation. So it is very important to remember what you got in the first place.

This will be an important information if you are considering buying a second policy, which will be a complementary from the first one. Most of my clients, who already have insurance policies, when asked, most of them do not remember their benefits.

When I ask them how much are they getting from the policy, they often say, “I forgot.”

How to avoid this:
Take time to know at least these basic things about your policies:

Death Benefit (Face amount) – in case of death, this is how much your beneficiaries will get.
• What are other living benefits you can get? And how much are you covered?

Critical illness benefit?  – In case you get critical ill like stroke or cancer, this is the lump sum amount you can get and you can use.
Comprehensive accident benefits? –  In case you get involved in an accident and gets amputated, how much are you covering?
Total disability waiver? – If suddenly, you cannot work anymore because you became disabled, should you still be paying for your policy?


Why do you need to know all these?
Because knowing all these could change or save your life.


For your Financial Health,

Dr. Pinky Intal





Want to be guided in getting the right plan for you? Contact me here.

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Pinky De Leon-Intal, MD, RFC
Doc Pinky is a licensed Medical Physician, Internationally Registered Financial Consultant, Certified Investment Solicitor and Associate Wealth Planner and Estate Planner of the Philippines. She loves to educate and spread financial literacy. She is a Lactation Consultant. She loves to travel. She is a devoted wife and mother.

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