Going to buy a life insurance policy? Mistakes to avoid.

When Columbia, MO residents seek to purchase a life insurance policy, they are often motivated by a need to have some security for their family if the unthinkable should happen. This simple need can get complicated quickly as they learn about the options available in the insurance industry. Navigating the choices and understanding which ones are important can be a challenge for even the savviest consumer.

We often find people have purchased a policy in the past and they don’t fully understand what they have purchased or whether or not it is the best solution for their family. We don’t sell insurance, so explaining pros and cons of certain coverage without any sense of sales pressure is part of what we do.

Here are a few mistakes to avoid when considering life insurance.

Most importantly, you need to understand the difference between “Term” versus “Permanent” insurance policies. Term life insurance allows you to purchase life insurance that offers a death benefit payout – typically over a certain period of time. Permanent insurance policies –also known as “Cash Value” or “Whole life” – offer a death benefit in addition to an investment vehicle designed to build cash value.

Permanent insurance policies come in numerous varieties that can confuse many buyers. This complexity is at the heart of the problem for Columbia, MO consumers. Scott Witt, a fee-only insurance consultant in Milwaukee, says, “The biggest problem with [permanent insurance] is the complexity of the policies. As the [consumer] confusion increases, the balance of power shifts to the selling agent.” Witt describes the difference between a good permanent insurance product and a bad one as “overwhelming.” “It’s as if consumers are buying a car, but some are buying a Maserati, and others are buying a Gremlin—yet both are paying the same price. Many won’t understand what they purchased for their entire lifetime.”


Don’t purchase life insurance without considering how it fits into your overall financial plan. Purchasing the wrong policy can be hard on your wallet today and even harder on your beneficiaries in the future.  Work with a financial advisor to understand if a life insurance policy is the best way to give your peace of mind.

For other insights on life insurance as part of your financial plan, please check out our Columbia Tribune article.


As a financial planner specializing in comprehensive financial planning, Tim enjoys helping clients in Columbia, MO with handling financial risk and other financial issues.

If you would like to learn more about this and other personal topics serviced by Clarity Financial please contact us at 573-447-7007. Clarity Financial, LLC is a fee-only financial advisory firm in Columbia, MO. Appointments are welcome and initial consultations are free. 

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This article is the property of Clarity Financial LLC.