As the top of operations at Haven Life, I see a number of people buying term life to financially protect their families. Individuals with different backgrounds, occupations, and family structures – all coming together for that common good of financial planning.
What's interesting about term life insurance, versus other products, is its lack of tangibility. If you have purchased a policy by yourself life, which the most of people do, and were to die, you'd not be the individual receiving the death benefit. Therefore, you have to pay your premium each month and assume, it'll all work itself out should you die within the term length.
I'm a husband, father to 2, and a proud life insurance policy owner. I've got a unique perspective since i understand what exactly happens with my life insurance policy after i die and also have informed my spouse of where she will find necessary documentation and what to expect.
Not all people have the posh of understanding the ins and outs of an existence insurer, though. And, I realize it can be easy to bother about, “What when there is an issue paying out the policy?” Before I delve into more detail, I must first say: almost all that complicated.
Now, read on in order to explain further.
There are plenty of resources available that explain why life insurance coverage is efficacious, but few clearly explain what goes on towards the death benefit once you die. Do your beneficiaries understand what they're entitled to, where the policy is situated, how you can access it and who to call? Should you be a beneficiary, would you know how to start?
Though death doesn't come with a how-to manual, the fate of your death benefit may be easily explained and preparations can be made to guarantee the spending of the death benefit is comparatively seamless.
Here are pretty straight forward steps to guarantee the right beneficiaries have the facts they have to access the death benefit as quickly and smoothly as you possibly can.
Notifying Your Beneficiaries and Storing the Policy
As soon as possible after you purchase a term policy, make your beneficiaries know that they have been listed. This may seem obvious, but forgetting to notify them is really a frequent mistake. This may be because many people can't stand referring to their very own mortality or because they just keep forgetting to inform them. Either way, accept your mortality, write an email to remind yourself – whatever it takes, just don't assume your beneficiaries know.
While you're in internet marketing, I would recommend letting them learn about some key details of the policy like:
- Who the insurer is
- Policy number
- The policy face value ($100,000, $250,000, $500,000, etc.)
- Term length or date of expiration
To avoid burdening your beneficiaries with seeking out your policy, make sure they know where and how to gain access to it. Print it, put it inside a rut and give your beneficiaries a duplicate, or save an electronic copy inside a secure folder combined with the logins needed to can get on. Share with your beneficiaries the policy's location and access information, and provide all of them with the insurer's contact details. This really is all done to obtain the death benefit as quickly as possible.
Keeping Your Policy Up to Date
As life changes (marriage, kids, divorce, mortgage), improve your beneficiaries according to your present financial responsibilities. Remember: it's those designated within the policy as beneficiaries that get the death benefit – not those you intended but forgot to incorporate. Additionally, a life insurance policy is really a legally binding document. For example, naming a different beneficiary in your will won't overwrite the beneficiary you have outlined in the policy.
Additionally, make sure you've included the correct contact information for your beneficiaries, and get them to update you in case that information changes. The more information you include, the simpler it will likely be for that life insurer to locate your beneficiaries should you die. (We'll go into this in a little bit later.) Best case scenario, the insurer should know: the beneficiary’s full name, birth date, ssn, address, phone number and relationship to the policyholder (you.)
The great news is: it's not hard to improve your policy! A high level Haven Term customer, you can simply log in to your account and update the info. If you bought your policy with an agent, contact the agent or even the company and ask for an update to the beneficiaries.
Collecting the Death Benefit
This may be the a part of life insurance that's a little- weird- if you are the main one whose life is insured because you'll never begin to see the procedure for collecting a death benefit.
The fastest route is if the beneficiary contacts the life span insurer. This is exactly why it's important they know all the details I earlier mentioned concerning the policy. When the required information is provided to the insurer, they are able to then start the claim process, which typically takes 30 days or less. If you're worried that the family will put off contacting the insurer or will feel overwhelmed as to where to start, you shouldn't be.
Many insurers have tools that allow these to scan available death records on the periodic basis (often monthly). If the insurer finds that the insured has passed away, they will proactively attempt to contact the primary beneficiary. (It goes to how important it's to possess accurate contact details.) If, for some reason, the insurer doesn't have the right contact information for the beneficiary, they still have many ways to try and reach them. Including: searching for relatives based on obituaries, internet searches and researching various databases. Trust me, they do their due diligence to find beneficiaries.
Next, the beneficiary fills out the death claim they're given in the insurer and submits it to the insurer plus a certified copy from the insured's death certificate. Once they've done this, the death benefit will likely be paid within 30 days.
Worth noting here, most life insurance coverage buyers take ratings into account when purchasing a policy. The reason ratings are important is because they indicate the general financial strength of an insurer, which suggests their claims-paying ability concerning spending the death benefit. Most experts recommend purchasing from an A+ or better-rated insurer.
The “Policy Finder” Service
Another service that everyone should know about may be the “Policy Finder” service. Many state insurance departments have formulated free “Policy Finder” services to help families in locating unclaimed insurance benefits. How it works is that you simply submit a request to some state insurance department that gives some basic information about your deceased loved one. Typically, the deceased's name, birth date, last address, and a death certificate. The insurance departments then consolidate the information and send it securely to a lot of insurance companies. The insurance companies check their records and, if there's a match with benefits due, they'll then begin the claims process.
You can look at your state's insurance department web site to see if they provide this particular service.
How Death Benefits Are Paid
Death benefits are paid following claim acceptance either as you lump sum payment or as installments depending on the policy. With our Haven Term policy, we've attempted to eliminate some confusing options in the name of simplicity. We pay a lump sum payment, tax-free death benefit. Easy.
If nothing else, remember:
- Regularly check in on who you've listed as beneficiaries and if their contact information is true.
- You don't need to be worried about in case your life insurance coverage death benefit will be paid towards the beneficiaries you list. We've got you covered.