How to Ensure Your Life Insurance Benefits Go To Your Heir

 

Recently, 11 major life insurance companies agreed to pay $763 million to the heirs of deceased policyholders after it was discovered the companies continued billing customers for their policies even after they were dead.

This agreement is the second in the last two years to be reached with insurance companies, which had previously agreed to provide restitution and do a much better job of locating beneficiaries after being sued by the attorneys general of several states for not paying out benefits to the heirs of deceased policyholders.

This pattern seems to indicate that we all need to do a better job to ensure that the life insurance benefits we pay out come back to our heirs, or named beneficiaries, in the way we intend.  Here are 5 tips for making sure those you intended benefit from your life insurance:

Be truthful in your application.  If you have not been completely forthcoming about a major medical issue or your health habits (smoking, drinking, etc.) in your application for a life insurance policy, that policy could be declared null and void and your heirs or beneficiaries would be out of luck.

Don’t let it lapse.  If your family is counting on life insurance benefits to pay the bills if something should happen to you, and you have not been paying the bills for the policy, your family is left unprotected.  If you are having trouble paying a more expensive whole life policy, consider exploring a less expensive term policy.

Have a beneficiary bench.  Having a beneficiary on your policy who dies before you do is a recipe for disaster – and it happens much more than you think.  Designate a secondary as well as a final beneficiary for your life insurance benefits, and update them as the need arises. We recommend naming your trust as the beneficiary of your life insurance benefits, rather than naming an individual or even series of individuals.

Play it safe.  If you die because you engaged in risky behavior (not covered by the policy) – or you take your own life – your heirs or beneficiaries will likely receive back only what you paid in premiums, and not the full value of your policy.

Talk about it.  The primary reason that a vast majority of potential beneficiaries never see a dime in life insurance benefits is because policies were lost or misplaced and family members were never told of their existence in the first place.  So if you have a life insurance policy, let your family know.  And ask them if they have one, too.

If you do planning with our firm, we prepare a Family Wealth Inventory (and keep it updated annually) for all of our clients.  Give us a call at 720-248-7621 if you’d like us to help you with this too and ensure your family never loses track of any of your assets after you are gone.

Best Mother’s Day Gift Ever? The Kids Protection Planning Kit

Best Mother’s Day Gift Ever?  Protecting Your Kids. 

By now, the flood of floral commercials has already reminded us that Mother’s Day is this Sunday, May 12.  But before you plunk down hard earned cash on something that will wilt and die in a week or so, consider a gift that is truly priceless: a plan for your kids (or grandkids) that provides Mom with the peace of mind that if anything should happen to her (or both of you), her children will always be in the care of  people she knows, loves and trusts.

We all hate to think that something could happen to us, but we know it happens to others like us every day.

We’ve all seen the news stories of moms and dads who leave their children with a babysitter, get into a terrible accident and don’t make it home.

The babysitter calls and calls, but there is no one to answer. The police are summoned and the children have to be placed with Child Protective Services. It’s one of a parent’s worst fears.

We’ve seen the stories of children placed in the care of people they barely know just because they are related by blood since there was no plan in place that dictated who would take on this incredible responsibility.

And we have seen the fall out of family fights created when mom and dad didn’t make a plan and the family couldn’t agree on what would happen.  Or in the worst case, what happens when there is no family available.

In all of these cases, it’s left up to a judge to decide when mom and dad don’t.

We know you don’t want this for your children (or grandchildren, nieces or nephews).  And this is where good estate planning can ensure it never does. Not for your kids.

A good estate plan includes planning and tools that allow Moms (and Dads) to make sure there is never a question about who will take care of your kids if you are in an accident.  Estate planning for those with minor children includes, as needed, the following types of documents:

  • Legal documents to name short-term guardians who can be there immediately for your children so they’ll never be taken into the arms of strangers or anyone you wouldn’t want. Not even for a moment.
  • Letters to the people you name as short-term guardians so the people you’ve named will know just what to do if called upon.
  • Instructions to everyone who takes care of your kids as to exactly what to do if you are in an accident … so there’s never any question about who to call.
  • Legal documents to name long-term guardians who will raise your children just as you would so there is no family feuding over your children.
  • Letters to your long-term guardians letting them know what to do if called upon.
  • Instructions and guidelines for your long-term guardians on how you want your kids to be raised…make sure your kids are raised with your values, insights, stories and experience.
  • Delegations of Power and/or Medical powers of attorney for your minor children so the next time they travel without you or you travel without them, you know they’ll get the medical care they need.
  • A custom, personalized I.D. card for your wallet stating that you have minor children at home and who should be contacted if you are in an accident.

As an estate planning attorney with kid of my own, I want to make sure a legal plan is in place to take care of your kids and think this Mother’s Day is the perfect time to gift this planning to your family.

We include specific planning for minors with all the planning we do for families who plan with our office.  You can purchase a special gift certificate and flowers from our office to give this Mother’s Day, with the flowers being on us.  Mention this post when you call 720-248-7621 to schedule your appointment.