Review the following tips before buying a life insurance policy.
Do some preliminary research. You need to be sure you are in the know, so you don’t buy a product or amount that you don’t need or overlook the types and amounts that are right for you. Your estate planning attorney can help you make objective decisions about your insurance needs.
Let’s face it, jobs change. You shouldn’t rely on an employee benefit that may not carry over if you leave the company. Also, you may experience medical issues before you leave the company, which may make it more difficult to buy coverage later. So consider buying outside coverage while you can.
If you’ve named a minor child as a beneficiary, or even a secondary beneficiary, after your spouse, you could be creating double trouble. First, your life insurance would have to go through a court process and subject to the control of a financial guardian, and then second, whatever is left would be distributed to your minor child when he or she turns 18. You can easily avoid this by naming a trust as beneficiary of your life insurance, thereby keeping your life insurance out of court and ensuring your child doesn’t receive control until he or she is ready. Plus, then you get to decide who takes care of the life insurance money you are leaving behind, until it’s distributed to your child. And you can even build in protection against your child’s future divorce, or any creditor issues.
If you receive child support or alimony, insist that your ex-spouse have a term life insurance policy to guarantee you are able to collect on your settlement or support obligations, if your ex-spouse dies before completing the payments.
Many experts suggest that folks only need life insurance to cover their working years and while they raise a family. But before you decide on what kind you want, think about your budget and your goals. Term life insurance is typically affordable and covers you when you need it most. Permanent insurance typically costs more, but is helpful to cover estate taxes or if you want to use it as an investment vehicle with guaranteed returns or for creditor protection.
A living benefits rider could allow you to access funds if you were diagnosed as terminally ill or with a chronic and debilitating condition. Keep in mind that the chances of becoming disabled before you retire are increasing. And according to the U.S. Census Bureau, just over 1 in 4 of today’s twenty-year olds will become disabled before they retire.
Insurance is a valuable part of your estate plan. If you’re interested in learning more about how insurance fits in with protecting your family and achieving your goals, schedule your consultation with us.
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