Life
insurance is supposed to provide a benefit for the people you leave behind when
you die. It provides a large sum of money that gives those people a financial
cushion. The idea behind it is to bridge the gap between your death, and thus
the loss of your income, and the start of a new job for your beneficiaries,
enabling them to support themselves.
Unfortunately,
many people do not realize what it is actually like to try to claim a life
insurance benefit. They know the basics, but they miss important details, such
as how long it takes to actually get the money.
If
you are signing up for life insurance, you need to account for these details.
Failure to do so may make your beneficiaries' lives more difficult as they try
to grieve for you and handle your affairs.
First,
keep beneficiary names up to date. You do not want certain family members
assuming they will receive a certain amount of money when you have added
people. Disowning those original beneficiaries can also cause confusion.
Whenever
you have a change in who you want the money to go to, such as the death of a beneficiary,
you will need to contact the life insurance company immediately. The process to
change beneficiaries is usually very easy, so this is a task that you shouldn’t
ignore.
Be
sure all of your beneficiaries know when you cancel or cash out a life
insurance policy. Your beneficiaries will find it frustrating to dig through
all your insurance paperwork only to be told you no longer have a policy. Even
if the money isn't important to the beneficiaries, that's wasted time that they
could have spent on another aspect of your estate.
You
and the beneficiaries should have a realistic understanding about how long it
can take to get the money. First, your heirs will need your official death
certificate. Not the preliminary one released by the mortuary and hospital, but
the official one sent to you by the state.
Then,
after your heirs send the certificate to the insurance company along with any
claim paperwork, they will have to wait for the information to be processed.
This
delay means that your beneficiaries should not rely on life insurance money to
cover funeral costs or pay for the first month or so of expenses. To cover
those costs, you may want to have your bank accounts marked as payable on death
to your beneficiaries.
Those
accounts will require your death certificate as well, but the money will be
available much earlier than the money from the life insurance claim. An
official death certificate can take around 10 to 12 days to get, and
payable-on-death money is generally paid out immediately once the certificate
is presented.
Re-evaluate
your life insurance policy amount every decade or so. The amount you think will
be adequate now may be sadly outdated — and completely inadequate — by the time
you pass. Rents can spiral up, you can have more children, or you may even move
to a much more expensive part of the country.
Prepare
now so you don’t leave your family in a financial bind because you forgot to
update an amount you chose three or four decades before your death.
If
you have old life insurance policies that you want to get rid of and replace
with better options, contact Habersham Funding LLC. We can
help you work through your options and steer you in the right direction.
