Getting Life Insurance isn’t just a matter of purchasing a policy and putting your feet up. In addition to financial investment, it also involves a little bit of estate planning as well. This is because beneficiaries have to be notified about how to move forward when it’s time to file a claim. The worst thing that could happen to someone who’s acquired Life Insurance, is for their beneficiaries to lose out on the claim simply because they were uninformed about the policy. If you want to avoid leaving your loved ones stranded, it’s important to maintain good records, and to make arrangements for your beneficiaries to receive compensation after you die. Here are a few tips on how to design an efficient Life Insurance succession plan:
1. Make a Reference Sheet for Your Beneficiaries:
Each beneficiary on your policy should know the details of how to file a claim when the time is right. The timing of how and when to let them know about the policy is up to you, but when you do decide to inform them, provide them with a reference sheet which summarizes the following information:
▪ The insurance company which issued the policy.
▪ The classification of your policy (i.e. Term, Whole or Life).
▪ Your policy number.
▪ The specific date your policy was issued.
▪ The amount of your death benefit.
▪ The location of your original insurance policy/contracts.
▪ Contact information for any specific agents who sold you the policy.
▪ Step-by-step instructions on how to obtain a death certificate.
▪ Step-by-step instructions on which office to reach out to when it’s time to file a claim.
2. Choose How and When to Inform Beneficiaries Wisely:
Purchasing Life Insurance is a considerate and generous thing to do for your beneficiaries. However, since Life Insurance is process which involves a transfer of wealth, if any of your beneficiaries have unethical instincts, shedding light on the fact that you have a policy could create conflicts, or life-threatening situations. Make sure that the people you trust with such sensitive information are responsible, discreet and honorable.
3. Record Some Video Instructions:
Technology makes it easy to draft and file official records, especially when said records have to do with formal things like insurance. Beyond assembling stacks of detailed paper work however, it might help to record a video so that you can issue instructions to your beneficiaries in your own voice. Video recordings are also a great way to convey sentimental messages which can’t be included in claim forms or contracts.
The easiest way to guarantee that your beneficiaries are taken care of through your Life Insurance policy is to solicit the services of an estate lawyer. It costs a little extra to mediate the process through a lawyer, but getting representation has the benefit of keeping your policy private, while ensuring that beneficiaries are contacted promptly when you die. If you prefer to manage the policy on your own without legal representation, then see to it that your beneficiaries actually know that the policy exists, and that they have the technical details on how to file a claim. Keep multiple duplicates of your policy information at home, and in a safety deposit box, and time-stamp your records so that any revisions made to the policy can be traced without confusion.