5 Costly Insurance Mistakes Hard-Working Families Make
After years of sitting at kitchen tables with families across the country, the same handful of insurance mistakes show up over and over. Each one can cost tens of thousands of dollars — or leave loved ones unprotected at the worst possible time. Here are the five biggest, and how to make sure your family avoids them.
Mistake 1: Relying only on group life insurance through work
Employer-provided life insurance is great, but it usually disappears the day you change jobs. And the standard 1x or 2x salary coverage is rarely enough for a family. Always layer an individual term policy underneath your group coverage so your family is protected no matter where you work.
Mistake 2: Underinsuring the stay-at-home parent
We covered this in another article, but it's worth repeating: the unpaid work of a stay-at-home parent is worth $50K–$70K a year. Insure them for it.
Mistake 3: Buying whole life when term would do the job
Whole life pitches sound great until you compare premiums. A young family can often get 10x more death benefit with term — and invest the difference in a Roth IRA or 529 — than with whole life. Whole life has its place, but it's not the right tool for replacing income during the working years.
Mistake 4: Putting off long-term care planning
Most families don't think about long-term care until a parent's diagnosis forces the conversation — and by then it's often too late to qualify for coverage. Start the conversation in your mid-50s, not your 70s.
Mistake 5: Not updating beneficiaries after life changes
Marriages, divorces, births, deaths, and remarriages all change who should receive your money. Beneficiary designations override your will — and the wrong beneficiary on a 401(k) or life insurance policy can send hundreds of thousands of dollars to the wrong person. Review beneficiaries every 2–3 years and after any major life event.
Key takeaways
- Don't rely only on group coverage through work.
- Insure the stay-at-home parent's economic value.
- Use term life for income replacement during working years.
- Plan long-term care in your 50s, not your 70s.
- Audit your beneficiaries after every major life event.
Want to talk through your situation?
Schedule a no-pressure conversation with Michael — phone or Google Meet, nationwide.
Schedule a meeting