10 Common Investment Insurance Mistakes to Avoid at All Costs

Have you ever settled on a pair of shoes only to see another pair that perfectly satisfied all your criteria? Of course, you could go and buy that second pair, but that’s not exactly the case with investment insurance.

Investment insurance is a long-term choice, so it’s a must to get it right the first time. Don’t know where to start? Let’s dive into the most common investment insurance mistakes to avoid.

How to Avoid Mistakes in Investment Insurance

Investment insurance can be a powerful tool for financial growth and security, but it also comes with risks and pitfalls. What are the common mistakes in investment insurance?

1. Neglecting Your Financial Capability

Investment insurance products promising high yields is tempting for those who are aiming for financial growth. A common pitfall is underestimating the financial commitment that comes with investment insurance, leading to people taking on policies with premium payments beyond their financial capacity.

Disregarding your financial reality and failing to sustain your premium payments could lead to policy lapses, penalties, and loss of investment value.

So, to avoid this, it’s crucial to assess your income and expenses. Align your financial capability and financial goals with your policy to avoid financial strain and secure your investment’s success.

2. Automatically Choosing the Policy with the Lowest Premium

On the opposite end of the first pitfall are investors who dash to the policy with the lowest premium without regard for the details.

A policy with a lower premium often indicates limited benefits, higher deductibles, or restrictions on investment choices. While these can be valid options for those with a limited financial capacity, those who can afford a higher premium may miss out on comprehensive coverage or investment options that fit their long-term objectives.

The key is to prioritize your financial goals, coverage, investment potential, and policy terms over the initial cost so you can make a well-informed decision.

3. Following Every Piece of Financial Advice

There is a deluge of advice and tips on how to invest for beginners. Your friends may also offer suggestions here and there. Should you take all those pieces of advice? No!

Blindly following every tip (even if they’re from self-proclaimed experts) can lead to misguided investment choices. This is not because their advice was incorrect, but rather because their tips may not apply to your specific situation.

Keep in mind that different individuals have unique financial circumstances, risk tolerance, and goals. To avoid mistakes in investment insurance, conduct your own research, consider the advice in the context of your situation, or better yet, seek guidance from qualified financial advisors. These professionals are trained to understand your financial objectives and provide personalized recommendations.

4. Relying on One-Size-Fits-All Investment Strategies

Be careful of one-size-fits-all investment strategies.To stress, everyone has unique financial circumstances and goals. So, it’s dangerous to assume that one strategy can work for everyone.

Investment insurance offers various investment options, each with varying profiles and return potential. Consider your personal factors like your age, financial situation, and investment horizon when making your decisions.

More importantly, your financial advisoris available to help you create a strategy that’s right for you.

5. Failing to Consider Investment-Related Expenses

One thing that beginners tend to forget is that investment insurance involves various fees and charges, such as policy fees, brokerage fees, and investment management fees.

Although they seem like small amounts, they can have a significant impact on your overall returns. Pay attention to the fee structure of your policy and look for a policy with reasonable expense ratios to optimize your investment growth.

6. Relying on One Type of Investment

All types of investment carry risk. Hence, the age-old saying, “don’t put all your eggs in one basket.” Yet, this is a common pitfall for many investors who want to maximize high-yield investments.

Moreover, relying on one type of investment could leave you vulnerable to market fluctuations.

Diversification across different asset classes, such as stocks, bonds, and real estate, can help mitigate risk. The key is building a balanced portfolio that’s aligned with your financial situation and can withstand market volatility, thus increasing your chances of achieving long-term financial goals.

7. Not Reviewing Your Policies

Surely, you’d agree that people constantly evolve. Over time, your life may change – you may get married, get promoted, or have different financial goals.

Avoid making the mistake of leaving your investment insurance static even as your life changes. Review your insurance policies regularly to ensure that they remain aligned with your current needs and new goals.Assess your coverage, investment performance, and financial goals to make necessary adjustments.

8. Spending Your Investment Funds

It’s important to remember that your investment funds are not a quick source of cash. While you can withdraw your funds, doing so prematurely can erode your investment growth potential.

Investment insurance like the Solid Fund Builder is designed for long-term wealth accumulation. This policy allows your money to grow faster, but you can only maximize the returns if you contribute regularly and avoid tapping into the funds prematurely.

9. Losing Sight of Original Investment Goals

Money matters are unpredictable, so it’s easy to lose sight of your original investment goals.

Taking your eye off your goals is another dangerous pitfall. It can lead to impulsive decisions and suboptimal outcomes, which means you don’t reach your investment goals.

To avoid this, it’s necessary to regularly revisit your financial objectives and realign your strategies. This will also remind you of what you’ve set out to do to help you stay focused. An updated investment strategy will also help you avoid making decisions based on your emotions and short-term market trends.

10. Not Telling Anyone About Your Investment Insurance

This may come as a surprise but, yes, a common mistake people make after getting investment insurance is failing to inform their beneficiaries.

It is a wise step to keep your beneficiaries aware of the policy and/or its benefits so they can file a claim in case of unforeseen circumstances. You may want to ensure that all the necessary documentation is accessible to them as well.

Keep this information confidential between your trusted individuals, such as your spouse, beneficiaries, or financial advisor. This ensures that your wishes are carried out and your loved ones are protected.

Make the Right Choices with InLife

Investment insurance is a complex endeavor that, when navigated wisely, can lead to fulfilling payoffs. Keep in mind these ten mistakes to avoid in investment insurance so you can maximize your money’s potential and avoid losses.

A secure financial future is the result of a series of smart choices. Start by partnering with a trusted life insurance company in the Philippines. InLife offers investment insurance policies that can cater to your specific needs and goals.

Contact us today to learn more.