Any mistake that you make with your life insurance can be disastrous for your loved ones. Therefore, you should ensure that you protect your policy because you will not be around when they make claims. With extra know-how and careful planning, you will avoid common pitfalls and ensure that your family is well covered. These tips will help you avoid these mistakes.
Most people think that they require life insurance and will keep promising themselves that they will purchase a cover. However, financial issues hit most people a few months after the loss of a loved one. This is because most people just plan for insurance covers but they rarely purchase them. If you require life insurance, then you should purchase one sooner than later. This is because life insurance rates usually increase as you age and develop some health conditions like high blood pressure.
Taking an insurance cover without shopping around
Life indemnity quotes for the same cover will vary from one company to the other. This is why you should shop around and find the best rates in the market. Apart from comparing prices, it is crucial for you to confirm the financial rating of the company that you are considering. This will help you settle for a firm that has the strongest rating to guarantee that the company will pay out your heirs after your death.
Most people usually take the wrong amount of second to die policy. To get the right amount of how much you will require, you should add up your long-term financial obligations and then subtract the current life indemnity coverage and liquid assets like savings. Some of these obligations include mortgage, college tuition, debts and other child-related expenses. You should multiply your annual income by the number of years that you want it replaced.
Appointing a minor as your beneficiary
You can purchase a life insurance for your kids. However, it is a bad idea to name them as your beneficiaries. This is because if you die before they are of legal adulthood age, your insurance company will not pay off the benefits until a guardian is appointed by the courts. This will take lots of time and money must be paid for court fees and attorney charges.
Keeping your policy a secret
Some people have issues talking about their personal finances with their family members. However, it is crucial for your family to know that you have a survivorship insurance cover so that your beneficiaries can make a claim. Apart from your spouse and adult children, you should also inform your estate planning attorney, financial adviser and any other person whom you appoint as an executor or personal representative of your estate.
Your survivorship insurance cover will be a great deal of help to your children after the death of you and your spouse. Therefore, you should ensure that your heirs can make claims with ease. This is because you will not be there when the claims are made. Take your time and research thoroughly to avoid mistakes that may cost you in the end.