. . .read this first!
I was featured again in the Personal Finance section. Click on the image below to view the article.
Overinsurance
Particularly when it comes to cover needed for your surviving dependants, life insurance should be seen as an aid that offers financial continuity in the absence of your income. What that means is placing your dependants in a similar financial position as before your death, says Sonja Linde, a Certified Financial Planner and owner of InSync Financial Services. Bearing this in mind is key. “Insurance is not intended for enriching oneself or your family,” says Linde. “When you have an amount of cover that pays out on death or disability that will significantly enrich the lives of you or your family, that would be seen as overinsurance.”
. . .Even with protocols in place, there are those who will consider trying to swindle the system, but this can only end in tears. First, knowing that there is a payout on the other side of a claim event, some people will go to concerning lengths to get their hands on it. “Overinsurance can lead to unethical and dangerous incentives to claim against cover,” says Linde.
. . .Let’s also not forget that paying a higher premium for an overinsured amount can take an immediate toll on your finances. “Paying too much on insurance can result in shortfalls on other financial planning goals, such as retirement, children’s education or even just settling some debt,” says Linde.
