TABLE OF CONTENTS: What is Life Insurance? Why Life Insurance Matters in Your 20s-40s Locking in Lower Rates Protecting Your Loved Ones Covering Final Expenses Tax-Free Payouts The Cost of Life Insura...
There’s really no getting around it—discussing life insurance with loved ones can be uncomfortable. Unfortunately, with the coronavirus pandemic tearing through the country and the number of worldwide deaths approaching one million, it’s more important than ever to discuss life insurance options with your family members—especially if they do not have coverage today.
No one wants to be left to figure out the details of settling their loved ones’ affairs immediately after losing them. Having a conversation with the beneficiaries of your life insurance policy, or going over the details with your family members about their coverage, will save a lot of stress, discomfort, and confusion in the long run. If you spend a few hours attending to these details now, everyone can enjoy the peace of mind that comes from knowing you're prepared for the unexpected—or even the expected.
Talking to Your Life Insurance Beneficiaries
Too often, when an unexpected death occurs and there is no life insurance on the individual, the surviving family is left to make ends meet—not only for funeral costs but for immediate income replacement, etc. That poses a good reason to ensure that your dependents—whether existent now or a future consideration—are taken care of with a life insurance policy.
To ensure that your wishes are carried out quickly and with no confusion, make sure that both the primary and secondary beneficiaries of your life insurance policy are up to date and reflect current wishes. You don’t want there to be any room for confusion or interpretation when it comes to handling the policy proceeds after you are gone.
Life insurance companies will not only require your beneficiaries' full names, but may also request further identification such as addresses and social security numbers to ensure that they may quickly pay out the proceeds.
After you’ve designated your beneficiaries, consider talking to them individually or in a family meeting to lay out the details of your coverage. This will help clarify any potential confusion and allow your beneficiaries to plan for financial considerations ahead of the stressful times that follows the death of a loved one.
Related Reading: 6 Must- Do's When Naming Your Life Insurance Beneficiary
Talking to Your Loved Ones Who Don’t Have Life Insurance
No one really enjoys discussing their own death or the death of a loved one. It can be difficult to sit down with your spouse to talk about what a world might look like without one of you in it. Talking to your parents about what happens when they pass is also uncomfortable. Unfortunately, death is a part of life—that’s why life insurance exists. Having no plan in place often leads to undue stress, anger, and confusion for the surviving family members and is so much more difficult to deal with than having a proactive conversation.
According to JRC Insurance Group, “Life insurance means more in life than it does on paper. Be sure to help your loved one understand that the policy is meant to protect them and provide peace of mind. It’s not an insinuation anyone is ill or dying; it’s just another form of financial planning. When you think about it, life insurance serves the same simple purpose as a savings account, just to a much higher degree.”
Reviewing Life Insurance Options for Your Loved Ones
As you may already know, there are many different types of life insurance—whole, permanent, term, variable, etc.—and they may all seem a little overwhelming. Just like the amount of insurance you need differs dramatically based on your lifestyle, income, and the types of insurance that may be best suited for your family member also depends on a number of factors:
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What is your family member’s current budget—both income and expenses?
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How "fixed" of a life insurance premium does your family member want?
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Will your family member have a primary life insurance policy or will they be supplementing other coverage?
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Keep in mind that age and health also dictates the availability of some of insurance products.
All in all, remember that while a life insurance policy is strongly encouraged everyone, the types, amounts, and costs can differ significantly depending on the individual’s needs, current state of health, and age. And, remember—you don't have to tackle knowing everything about life insurance on your own; there are trained specialists who live and breathe life insurance, just waiting to share their knowledge with you.
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