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Life Insurance Research

Life insurance comes into use after your death. Given the importance of this policy to your family, it's up to you to make sure the money gets where it needs to go. What are some of the steps you must take to ensure your policy funds reach their destination?

1. Choose The Appropriate Policy

Life insurance comes in many shapes and sizes. However, two generalized categories exist.

  • Term Policies only last a certain number of years. They often have more affordable premiums, but you must renew the policy when the term ends. Upon your death, the policy can pay a lump sum to your survivors.
  • Whole Life Policies, also called permanent coverage, last indefinitely. They also might have extra cash options and ways to use your funds. However, they often cost more than term policies.

You might not be able to get any type of coverage in all circumstances. However, you often can adjust the coverage limits on your policy to your satisfaction. Therefore, look first at your own needs. Each type of policy might prove differently beneficial given your financial outlook. Let your insurance agent guide you in choosing the correct coverage.

2. Name A Beneficiary

You must determine to whom to leave your policy. This person is your beneficiary. Most policyholders leave funds to a spouse, child or other family member. However, some can leave funding to charities and other groups. List the beneficiary very specifically on your policy.

Here's the catch. Unless you act, your beneficiary can often use the funds as they choose. Therefore, consider setting up extra stipulations on your policy.

3. Leave Instructions About The Policy And Its Use

If you want more control over your policy, you'll need to leave instructions on the coverage. This might involve both your insurer and your legal counsel.

List in your will the existence of the policy. That will let people know where to find it. Also stipulate how the beneficiaries are to use the money. However, also list these instructions on the policy.

Many people establish a trust to govern the use of their policy. The trust is a legal framework that can set rules on who can use the money, and how they can use it. Often, a trustee (such as a lawyer) manages the distribution of the funds. This can come in handy particularly if you have beneficiaries who cannot receive funds directly, such as children. Essentially, a trust gives you more control of your money.

Consider these steps important for your survivors' benefits. They can help you ensure that your loved ones most directly benefit from the coverage you have gone to lengths to provide.

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