Important Things to Consider When Buying Life Insurance
Life Insurance Upstate is an agreement between a policyholder and an insurance company that guarantees the insurer will pay a specified amount to a named beneficiary when the policyholder dies. It typically involves a premium payment and a specific plan term.
People buy life insurance to protect their spouses and families from financial hardship in the event of their death. It can also help cover funeral costs and pay off debt.
Buying life insurance gives you the peace of mind of knowing your loved ones will be provided for when you pass away. You can purchase a policy that offers a lump sum payment to your beneficiaries to cover funeral costs, pay off your mortgage, provide ongoing income for your children or surviving spouse, or even help fund your retirement. If you are considering purchasing a policy, you should get a free price quote to determine how much coverage you may need and your monthly premiums.
If you are approved for a policy, the company will send you your policy documents to review and sign. You will also need to make your first premium payment. Once you have done so, your policy will begin. You should review your beneficiary information and other details regularly to ensure your policy continues to meet your needs.
When buying a policy, you can usually choose from two options: through a captive agent or independent agents. Captive agents sell policies from only one company, while independent agents typically offer a variety of life insurance products.
You can also buy a policy directly through the company, often online or by phone. Purchasing directly through the company can be a convenient option for people who want to save time and money by skipping the agent or broker step.
During the application process, you will be asked to provide medical and other information that is used to evaluate your eligibility for the policy. The insurance company keeps this confidential, but it helps them decide the cost and terms of your coverage. If you do not provide truthful information on your application, the insurance company can void your policy or refuse to pay a claim.
You can improve your chances of getting a policy by purchasing it early and maintaining good health. It is also a good idea to research the financial stability of the underwriting insurer and compare its ratings with others, as this can help you feel more confident that your policy will be there when you need it.
When you pass, it’s important to consider who you want to receive your life insurance death benefit. Most people generally choose a spouse or children as primary beneficiaries to replace the lost income they provide and cover expenses such as funeral costs. Others decide to name a trust, which allows them to specify how the money should be used and to avoid probate. A non-relative or charitable organization may also be named as a beneficiary. Beneficiaries can include anyone you wish, though you should carefully consider their financial situation and whether they’ll be able to spend the proceeds quickly enough to avoid an economic crisis.
In addition to choosing primary and secondary beneficiaries, you’ll need to decide how to divide up the death benefit if you have more than one beneficiary. A common method is “per capita,” meaning that each beneficiary receives an equal share of the policy’s death benefit. Some people distribute their death benefits per stirpes, suggesting that a deceased beneficiary’s share is passed on to their children (or other designated beneficiaries) rather than shared equally among all the survivors.
Some people also choose to name revocable or irrevocable beneficiaries. Revocable beneficiaries can be changed at any time by the policyholder without the beneficiary’s consent, while irrevocable beneficiaries cannot.
You can even make your pet or a favorite charity your beneficiary. It’s best to consult a knowledgeable and objective financial professional before deciding.
Once you’ve made your beneficiaries, they’ll be listed on the life insurance policy. You can change them at any time, though it’s wise to review them regularly. This is especially important if you’re considering significant life events such as births, deaths, marriages, and divorces, as these can impact your beneficiary selection.
You can also put some of your life insurance proceeds into a trust. This is generally done if you have complex family or business situations that complicate the handling of your estate. You’ll need to work with a trusted legal professional to set up the trust and specify how it should be managed.
Once you’ve purchased your policy, reviewing it regularly to ensure it meets your needs is important. Generally, it’s best to review at least once per year and after any significant life events that could change your insurance needs.
A life insurance policy is not something you want to “set it and forget,” as changes in your life may require reviewing your coverage or how you wish your death benefit to be distributed. For example, if your kids grow up and move out, you must either update your policy’s beneficiaries or change the payout amount. Another example is purchasing a new home that requires a mortgage, which could change how much life insurance you need.
You should also check that your policy details are up to date, including the contact information for your agent and the expiration and renewal dates of your policies. Keeping your records organized will make the life insurance review process much easier and help you keep track of any important changes in your financial situation that should be reflected in your life insurance coverage.
It’s also a good idea to review your life insurance coverage after any major purchase that might change the protection you need or after any significant financial milestones, such as retirement, buying a new house, sending kids off to college, receiving an inheritance, or getting married. These changes are sometimes called insurance-qualifying events and can indicate that you need to increase coverage or make other policy adjustments.
Suppose you have a permanent life insurance policy with an investment component. In that case, it’s also a good idea to meet with your financial professional regularly to discuss the performance of your investments and the overall progress towards your desired legacy goals. Keep up to date with any changes in estate tax laws or life insurance regulations that could impact your coverage.
Finally, reviewing your life insurance needs is a good opportunity to determine whether or not you still need coverage for a specified period (“term”) until your mortgage is paid off or your children finish college (“whole life”) or whether or not you need coverage for the rest of your life (variable universal life). Your agent can help you decide which coverage is right for you.
It is important to keep your beneficiary information up-to-date. This is especially true after a major life event, such as a divorce or remarriage, or if you have children who reach the age of majority. You can change your beneficiaries by completing a Change of Beneficiary Form.
Your beneficiaries control how your death benefit is divided. You can choose as many primary beneficiaries as you want, and you can designate their percentage of the death benefit. You can also add contingent beneficiaries. Contingent beneficiaries will receive the death benefit only if your primary beneficiary(s) predecease you.
Most insurance companies have their form for changing beneficiaries. A good idea is to consult with a financial professional or attorney before submitting any changes. Reviewing your policy annually and after a major life event is also a good idea to ensure it is still aligned with your financial goals.
Keeping your beneficiary information up-to-date is one of the best things you can do to help ensure your loved ones will be cared for however you wish. It’s an easy and important step to a comprehensive estate plan.
Some assume that there will precede a beneficiary designation on their insurance and financial accounts. But this is only sometimes the case. A court may look at your will but will also consider the details of your beneficiary forms. Beneficiary forms often take priority over a will, so it’s important to keep yours up to date and review them regularly.
If you consider naming a trust as your beneficiary, working with a legal advisor is wise to ensure the trust is structured correctly. It’s also a good idea to make a habit of reviewing your beneficiary selections on an annual basis or after a major life event.