Michael Ryan, Life Insurance Broker

What is the most common mistake people make when buying life insurance?

Answer: When people shop for life insurance, they frequently run into a few common pitfalls. According to industry experts, the single most common mistake is **buying too little coverage (being underinsured)**, closely followed by several other strategic errors.

Here is a breakdown of the most common mistakes and how to avoid them:

1. Buying Too Little Coverage (Underinsuring)

Many people mistakenly choose a coverage amount based solely on a rough guess, their mortgage balance, or a simple multiple of their income (like 1–2 years).

* **The Reality:** A true safety net needs to cover ongoing everyday living expenses, future child care, debts, and long-term goals like college tuition. Experts generally recommend aiming for **10 to 12 times your annual salary** as a starting point.

2. Waiting Too Long to Buy

Procrastination is incredibly common because thinking about life insurance means thinking about mortality.

* **The Reality:** Life insurance premiums are strictly tied to your age and health. Every year you delay, the baseline cost increases. Furthermore, if you develop a health condition down the road, your premiums could skyrocket, or you could become entirely uninsurable.

3. Relying Solely on Employer-Provided Policies

Many people assume they are fully covered because their job offers a basic group life insurance policy (often equal to one year's salary).

* **The Reality:** A single year of income rarely sustains a family for long. More importantly, **this coverage is rarely portable.** If you lose your job, switch careers, or your company cuts benefits, you walk away with zero coverage—and you'll be older and potentially less healthy when trying to get a new policy.

4. Choosing the Wrong Policy Type

People often buy a permanent policy (like Whole Life) when they only need a term policy, or vice versa.

* **The Reality:** Term life insurance provides massive coverage for a low cost over a set period (e.g., 20 years while raising kids). Perman