Is it possible to get too much life insurance?
[social_share]Life insurance is a necessity for most people with families. However there may be a case that a person is over insured, and there are a few ways of telling how they are over insured.
Many people are sold life insurance at a young age which can be far more than they need. For a single person with no dependents the best type of life insurance is one that covers funeral costs and a few other incidental expenses. While this type of life insurance is helpful to some, it can often be the case that when they are sold life insurance that they take too much out.
It may be that a person was mis-sold the life insurance. In this case then compensation can be asked for if it is shown that the life insurance was sold without consideration of the person’s circumstances. In these cases it is usually a good idea to get some specialist advice in order to find out if there is a case, and to pursue the case in the best way.
It is more often the case that life insurance is not mis-sold, but that the life insurance did provide for needed protection, but no longer provides that protection. A common situation where this can happen is when children have left home and found careers. While it may be the case that it can be predicted when a child will leave home and get a stable career within a few years, it can not be predicted to the exact month.
Another case is when life insurance is taken in order to support parents. It is becoming more popular for children, particularly only children, to take out life insurance to financially protect parents, or provide care for them, should the children die first. As much of this life insurance is for people in their thirties or forties it can be very cheap. However in many of these cases the parents do die before their children, in which case there is a life insurance policy without beneficiaries.
It is a good idea to consider whether the life insurance is really not needed. There may be other beneficiaries who would benefit from this life insurance, beneficiaries that the policy holder may wish to protect.
If there are no people that need to be financially protected then it may be a good idea for the person to sell their life insurance to a third party rather than simply stop paying the premiums.
