Life insurance protects your family from negative financial consequences after your death. It’s a product you can buy now to protect your loved ones in the future.
Purchasing and maintaining life insurance coverage is straightforward, but that doesn’t mean your job is done once you’ve signed the dotted line on a policy.
Here are some things to consider after purchasing your life insurance policy.
Your beneficiary is the natural or legal person who receives the death benefit from an active life insurance policy. As the policyholder, you are responsible for designating at least one beneficiary who will receive your policy payout.
If you did not designate a beneficiary prior to your death – or your beneficiary dies before you – your life insurance proceeds will go into your estate. If your estate must go through the probate process, your death benefit may be subject to creditors and estate taxes.
In such a case, if probate debt and taxes do not reduce the payout, your beneficiaries will have to wait for the completion of the probate process before they can access the funds. Additionally, your money may never reach your intended beneficiary if they are not part of your estate plan.
Let your beneficiaries know whenever something changes in your life – whether it’s the birth of a child, marriage or divorce, or a major purchase.
Contact your life insurer to change the form of beneficiary.
Whether you have group life insurance through a civilian employer or SGLI through your military service, your coverage does not stay with you after you leave your job. This means that your beneficiaries will only receive the death benefit if you die while you are working.
Covering yourself outside of work ensures that your family has a financial safety net regardless of your employment.
In addition, group life insurance through your employer may not cover your entire family. For example, SGLI tops out at $400,000.
The cost of life insurance increases with age and declining health.
Many life insurance companies will ask you to undergo a medical exam with your application, so it is important that you are as healthy as possible when you apply in order to qualify for the best rates. Unfortunately, many people don’t think about life insurance until they realize they need it—often later in life after an illness.
The longer you wait to buy insurance, the more expensive it can become. If something changes in your life that increases your coverage needs, start shopping quickly – don’t delay!
Although discussing death with loved ones can be uncomfortable, consider informing your beneficiaries of their beneficiary status. Providing policy information (including insurer name, contact information and your policy number) makes it easier for them to make a claim when the time comes. It can also help avoid delays in claims processing.
You can also use the conversation as an opportunity to offer some insight into what you want your loved ones to do with the proceeds of your death benefit.
For all your life insurance needs, Navy Mutual is here to help. We pride ourselves on doing everything in our power to provide affordable life insurance products to current and former service members and their families. To speak to a representative about your family’s needs, call 800-628-6011.
