Something you should always do when buying life insurance

July 5, 2020

The most important things to evaluate if you're buying a life insurance policy are the claims-paying ability and claims history of the insurance company. Assessing this is vital to ensuring your beneficiaries receive a payout promptly. After all, the reason you're buying insurance is for the payout if something terrible happens.

Here are some essential tips and recommendations to help you evaluate your existing life insurance carrier or explore different companies to find your best fit.

1. Understand how your life insurer's claims process works

Be sure to have your agent or yourself take the liberty of going through all that you will need to know to provide proper instructions to your beneficiaries. An excellent example of how messy this process can get would be to reference a woman by the substitute name of Jane. Jane is 70 years old and wants to leave a $30,000 death benefit to her family, so she buys a policy from the local neighborhood broker. Her broker appeases all her requests and gets her a plan that arrives in the mail in 2 weeks. Jane never hears from the broker again and puts her policy away in the cabinet somewhere and continues with her life. Years pass by, and the day comes when Jane, unfortunately, passes away at the late age of 82. Her family comes together to get things in order and, at some point, heard her talk about life insurance. Still, they have no clue where the plan is, nor did she mention the insurance company’s name. Jane's family is in a state of chaos, trying to rummage through her things and go through her bank records to figure out how to collect on this death check. In this scenario, who knows how long it could take to sort this all out on top of having to deal with arranging the funeral, grieving, and the other stresses of daily life. To avoid the mentioned scenario, always keep a copy of your policy in a safe place. Be sure to inform your beneficiaries of where it is and who to call if you were to pass away, especially if you do not have a will or appoint an executor to handle your estate.

2. Thoroughly understand your life insurance policy

More often than not, have I sat at kitchen tables reviewing life insurance policies that customers thought had more benefits than were promised. Or their life insurance was something entirely different than what they thought they purchased. Doing annual insurance reviews is the best practice to help consumers be sure they have the right protection. The National Association of Insurance Commissioners(NAIC) has excellent literature on the importance of annual reviews, among other resources, to help consumers navigate the world of life insurance.

If you like what you read today and are seeking additional information, send us a message today! We look forward to hearing from you.

This is not intended to be legal advice. Each state has different laws governing estate planning. Please contact a qualified attorney for further information about Estate planning or schedule a consultation here with one of our partnering professionals.