Life insurance expert warns that policyholders often overlook these common financial missteps
Key Points:
- Life insurance expert shares six most expensive mistakes people make after purchasing a policy, putting their financial protection at risk
- Common pitfalls include failing to review policies annually, keeping outdated beneficiary information, and assuming all life events are automatically covered
- Insurance specialist warns that 1 in 5 life insurance claims in the US get rejected, highlighting the importance of proper policy management
Buying life insurance is often seen as a responsible, once-and-done decision—but that assumption can leave families exposed. In fact, 1 in 5 life insurance claims in the U.S. are denied due to issues that could often have been prevented, from outdated paperwork to missing beneficiaries.
Meredith Bell, a life insurance expert at Everly Life, says it’s not just about having coverage, it’s about making sure it still fits your life. “We see it all the time: people take that first big step, but then forget the follow-through. Life changes, and your policy needs to reflect that.”
Everly Life is a modern life insurance company that focuses on flexibility and customisation to fit individual lifestyles. Their mission is to make life insurance more accessible, adaptable, and built for real life, not just the what-ifs.
Now, Bell is highlighting the most common (and often costly) mistakes people make after they’ve signed the dotted line, and how to fix them before it’s too late.
1. Not Reviewing or Updating Your Policy Annually
Most people purchase life insurance, file the paperwork, and never look at it again. But your needs can shift dramatically over time. If you’ve taken on a mortgage, had children, or even changed jobs, your original policy may no longer be enough.
Bell’s tip: “Set a calendar reminder once a year to review your policy details. Look at your coverage amount, premiums, and whether your current financial situation is still well represented. This simple habit can help prevent being underinsured when it matters most.”
2. Overlapping or Duplicate Coverage
It’s easy to end up with more than one policy, especially if you’ve picked up life insurance through work or taken out additional coverage over the years. While more coverage can sound good, it may lead to paying for features you don’t need or expecting benefits that won’t stack.
“Sometimes people pay hundreds extra annually for coverage they already had through work,” Bell notes. “Others assume their work policy provides adequate protection when it’s often minimal – typically just 1-2 times your annual salary.”
Bell’s tip: “Check for overlaps across your policies. Coordinating them properly may reduce costs or help you redistribute coverage to better suit different parts of your financial plan.”
3. Forgetting to Name or Update Beneficiaries
This is one of the most common errors people make—and one of the easiest to fix. If you haven’t listed a beneficiary, or you’ve left an outdated name on file, your payout might not go to the person you intend. In some cases, this can lead to disputes or even delays in the courts.
Bell’s tip: “After any major life event, update your beneficiaries. Even if you think your paperwork is fine, it’s smart to log into your insurer’s system and check that names and contact details are correct.”
4. Failing to Inform Family or Dependents
If your loved ones don’t know about your policy or can’t find the documents, the protection you’re paying for might never reach them when they need it most.
The problem is so widespread that the National Association of Insurance Commissioners (NAIC) created a Life Insurance Policy Locator Service to help beneficiaries find lost policies. The service has matched consumers with more than $6.7 billion in benefits since 2016.
“That’s billions of dollars that almost went unclaimed simply because families didn’t know these policies existed,” Bell points out.
Bell’s tip: “Keep a printed copy of your policy in a secure place, and let at least one family member know it’s there. You can also store details in a digital vault or include it in your estate planning documents.”
5. Assuming All Life Events Are Automatically Covered
Life insurance isn’t designed to adapt to changes unless you prompt it to. Getting married, starting a business, or taking on new financial responsibilities won’t be reflected in your policy unless you update it. That could leave you exposed without realising it.
Bell’s tip: “After big life changes, review both your coverage level and the type of policy you have. What suited you five years ago may not be the right fit today.”
6. Ignoring Life Insurance in the Bigger Financial Picture
People often think of life insurance only as a payout after death. But it can play a more active role in financial planning—helping you manage taxes, support dependents, or build long-term wealth depending on the product type.
“Your life insurance should work in harmony with your retirement savings, college funds, and estate plans,” Bell says. “When these elements are disconnected, you might be missing opportunities for tax efficiency or wealth preservation.”
Bell’s tip: “Talk to a financial advisor about how your policy fits into your wider goals. It’s not just about protection. The right policy can also support your retirement plan or serve as part of your estate strategy.”
Meredith Bell, Life Insurance Expert at Everly Life, commented:
“The biggest mistake I see people make with life insurance is thinking of it as a ‘set it and forget it’ product. Your policy needs to grow and change as your life does. Small oversights, like outdated beneficiaries or insufficient coverage, can have devastating consequences when families need protection most.
“When clients come to me, I ask them to imagine their family trying to make a claim on their policy. Would your spouse know who to call? Would your children know the policy exists? Could they easily access the documents they’d need? These practical questions are just as important as having the right coverage amount.
“Remember – life insurance isn’t about you. It’s about financially protecting the people who depend on you. Take the time to do it right, even after the policy is in place.”
ENDS
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About Everly Life
Everly Life is a modern life insurance company that focuses on flexibility and customisation to fit individual lifestyles. Their approach revolves around helping people design their financial future while embracing life’s possibilities. They offer IUL TermVest which is a hybrid product that combines term life affordability with permanent life benefits. Their philosophy is centred on making life insurance accessible and adaptable for various needs. They aim to provide simplified ‘Made for Living’ solutions that allow clients to protect their future while living fully.
Sources
Information on life insurance claim rejections: Life Insurance Claim Denial Statistics
Information on NAIC Life Insurance Policy Locator Service: CNBC
