If you’ve ever been witness to or have been involved in bitter battles over life insurance money, you’ll know how important it is to make sure that the right beneficiaries get life insurance monies. It’s not just bitter battles that make life insurance payouts ugly; sometimes, beneficiaries live for years as paupers, or struggle through times of financial hardships because they were not aware of life insurance help.
If you own a life insurance policy on yourself, this is one thing you just cannot miss. You have bought the policy to safeguard your loved ones interests when you are gone, don’t slack on the most important part now making sure that they get it when they need it! Some people think having too little in life insurance coverage is a crime, but its far worse when you paid all your life into a policy and didn’t do your due diligence in making sure they received it.
So how do you make sure life insurance money gets to the right beneficiary?
First, choose your beneficiaries wisely. If for some reason, you cant make up your mind about how much to leave behind or you are not sure if someone you are designating will use the money well, do your research and check out all available options. Maybe there are a way to keep the money in a trust fund until a young child grows older or goes to college, maybe you want to list contingency beneficiaries in case something happens to your primary ones. Talk to your agent if you have trouble making a decision, and think about how things might change for your beneficiaries ten years later. Have clear reasons for choosing beneficiaries; don’t choose someone who makes you sit on the fence when it comes to financial decisions.
Second, get into the habit of reviewing your policy yearly. You all be able to update your beneficiary list if major changes in your life have taken place, like the addition of children to a family or a divorce.
Third, keep this information confidential, but don’t hide it from your beneficiaries entirely. This is because life insurance companies expect beneficiaries to file for payouts on their own. Don’t expect the life insurance company to call your family and let them know they are going to be expecting a windfall. Nip disputes in the bud by making your intentions clearly known. If you do not want your family members to know about the policy until you are gone, let your beneficiaries know about lawyer and agent details if they need to, or keep a file where all of this is on record so they have access to it when needed.
Express your sentiments to your lawyer. Indicate in a will, but remember that updating your will doesn’t count as updating your life insurance policy. You must update your beneficiary list as the two documents are independent of each other, and the life insurance policy takes precedence when it comes to official documentation that the life insurance york provider will approve of.
A great way to ensure that your loved ones receive what’s best for them without having them directly handle the money is to set up a trust. This works really well for those who have large insurance policies running into a million or higher in payouts, and don’t want beneficiaries (especially if they are young or minors) to have access to all that money. In fact, minors are not given life insurance payouts; usually, parents designate a trustworthy elder who will be responsible for their safekeeping until they turn 18, after which the remainder of the money can be used by the child for college or other expenses.
Don’t leave loose ends untied and work unfinished when it comes to life insurance. A financial planning tool you can use and rely on in times of trouble, your life insurance policy can work for you if you remember to review yearly. This simple act can save you and your family plenty of grief and angst later on. And while you are reviewing yearly, check out some inexpensive life insurance quotes online and compare your premiums. You could save by switching to another company if you look up quotes early and compare.