Everyone needs Life insurance, but not everyone has a good understanding of this important type of insurance. Two of the most frequently asked questions that insurance professionals get from people are:
#1: Why do I need Life insurance? Although it might seem oversimplified, the answer is: Everyone needs Life insurance.
If you are wealthy, Life insurance proceeds will pay taxes, final expenses, outstanding bills (such as mortgages, car loans, credit cards, etc.) so that your family gets the full value of everything you have spent a lifetime working to accumulate.
Conversely, if you are not independently wealthy, then Life insurance is the only vehicle that will “create” an instant estate upon your death that can be passed on to your loved ones. What might have been denied to you during your life time through no fault of your own, despite hard work and effort, you can attain at death with a Life insurance policy!
There is nothing else in the financial world that can do for you and your family what a Life insurance policy can do, guaranteed, whether you die tomorrow or 50 years from now.
When a loved one or close family friend passes away, there are certain things that need to be done right away in order to be sure that the beneficiary gets the proceeds from the insurance. Begin by carefully checking the person’s files and telephone book for names and contact information of their insurance agent(s). Get in touch with every insurance agent and company with which they had a policy, even if you are not sure it is in force. Speak with their employer’s HR department, both current and previous to determine if there are any insurance benefits in effect. Check the mail for up to a year after the passing for notices from insurance companies about premiums due, etc. Look over the past several years of tax returns for any references to interest received or interest paid from or to a Life insurance company. These steps will help you to determine whether you have covered all the possibilities. If you need help locating a Life insurance company, check with the state insurance department or A.M. Best Co. Be sure to get several copies of the death certificate since you will need this to file a claim with each company.
#2: How do my beneficiaries (spouse, children) receive the proceeds? Don’t make the critical error of assuming that your beneficiaries will automatically receive your estate!
To start with, most states have very specific guidelines regarding how an estate will be probated if you die without a will. Your spouse/children may not automatically get everything you own. In fact, the state will create a plan for the distribution of your estate if you don’t have a will. If this occurs, the distribution probably will not be what you had envisioned!
Some people believe, “I don’t really have a lot of money, so I don’t need a will to take care of things.” Incorrect! Estate planning is often thought of as something only rich people need. Of course, the larger the estate the more complex the will needed to handle the distribution, but even a modest estate requires a will to be sure your assets go where you want them to go. And, do not think a simple one page “boiler plate” document will suffice. These wills can often create more problems than they solve. Even a minor error or oversight can negate everything.
Remember, you are not going to be there to make your wishes heard; the only voice you will have is the one in your will or trust, so do not gamble. It is just too important an issue to take chances. Speak with one of our insurance agents to make sure your final wishes are documented in full.