Life Insurance Awareness Month – September 2014

September 3, 2014

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It is Life Insurance Awareness month again and with the students returning to school, it is time to re-examine your financial security. Life insurance is a product which few consumers understand. Therefore, it is beneficial to have a competent life insurance agent to support you in making a wise decision to protect your family.

Approximately 95 million people are without life insurance protection which means that their families are at risk for financial calamity due to the untimely death of a head of the household. Many families today are headed by a single parent which would leave the family even more at risk. If the parent dies, prematurely, the children would be orphaned. Therefore, single parents need to consider who they would appoint as a guardian to the children. They would also need to provide an income to raise the children. Many families today are ill-equipped to assume the responsibility of one or more children in addition to the family which they may already have. Therefore, the best way to provide an income would be to purchase life insurance.

Typically, employees opt to acquire life insurance at a group rate at work for themselves and for the family, because it is inexpensive. Paying for life insurance weekly or bi-weekly seems to be more feasible for most employees. They can also purchase a separate life insurance policy from an insurance agent outside of work. In this case, employees will have to determine how long the life insurance will cover them and if the policy is portable, i.e., if coverage remains in force if the employee retires or leaves the company.

Employees would be wise to purchase a separate policy away from work to ensure there is life insurance coverage during gaps in employment or when the employee retires. Some life insurance policies will reduce coverage upon retirement, and some policies are not portable. These are all questions which employees should be asking their life insurance agent to investigate while they are considering purchasing life insurance protection. Consumers should review their life insurance every two years to ensure here is adequate protection for the family in the event of a catastrophe. Countless people have discovered, when it was too late, that their life insurance policy was inadequate to pay for final expenses or to protect the family.

Throughout the month of September, there will be articles available to help educate consumers on the importance of protecting the family with life insurance. Subscribe to this blog to keep up on latest developments.

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Naming Beneficiaries on a Life Insurance Policy

March 7, 2014

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Perhaps one of the most sensitive issues in managing a life insurance policy is in choosing beneficiaries. If we have been responsible enough to buy life insurance, we must also be responsible enough to appoint the best person to collect the proceeds, use it wisely, and fulfill our wishes as to how the proceeds should be spent.

One of the benefits of life insurance proceeds is that they can be collected with having to be probated. The beneficiary simply notifies the life insurance company of the death of the policyholder, and the insurance company processes the claim. A check is then issued to the beneficiary within a few days to a few weeks, after the insurance company has determined that the beneficiary has a right of claim according to the terms of the insurance contract.

If the policy being considered is to pay the final expenses of a burial, a spouse should be named as the beneficiary, since, he or she will be the one to make the funeral arrangements. Usually one beneficiary is needed, but the policyholder can name a contingent beneficiary, if the beneficiary dies before the policyholder has a chance to name another, or if both the policyholder and the beneficiary were to die together in an accident. The policyholder can change the name of the beneficiaries as often as he/she feels necessary.

For larger policies which are being created to fund a trust or to give money to multiple members of the family, the policyholder can name more than one beneficiary along with the percentage of the proceeds to which each has been assigned. In this way, the proceeds can be collected without having to go to probate and the proceeds are tax free.

It is important to choose a beneficiary wisely as this is going to be the person who will carry out your wishes. If you decide to tell the person you have chosen to be a beneficiary, it would be wise to make it clear how the money will be spent. It is also wise to have a will which will detail your wishes for the settlement of your estate. Many people have disputed the settlement of estates and the decisions as outlined in a will.

If a policyholder does not have a next of kin or does not wish to name a beneficiary from the family, he/she can name his/her estate as the beneficiary. In this way, when the estate is settled, the probate judge will disperse the funds according to his own discretion. As it takes two or three years to settle an estate, or maybe longer, the family will have to wait for the probate judge to make a decision. This could interfere with the funeral arrangements if there exists no other insurance or proceeds to pay these expenses. This is why a life insurance is necessary for the payment of final expenses.

The probate laws for each state are different and it is important for all the involved parties to know how the laws are interpreted. If there are questions, a lawyer can help ensure that the family follows the laws of the state and the instructions outlined in the will.