Part 3 of a series
In my last article, I pointed out how important it is to create a clear plan for your loved ones. We went into how a will creates peace of mind, reducing the risk of disputes among beneficiaries.
Moving on to the next mile marker on this road map we just talked about financial institutions and individual’s and that leads us to life insurance. You should have your life insurance polices all gathered in one place and you should check on them to make sure they are currently in force and what type of insurance policy they are. There are many types of life insurance but the two most common is whole life and term life. Whole life offers lifelong coverage as long as you continue to pay the premiums and there is cash value which grows over time which you can borrow against if you need to. The premiums for this insurance are fixed meaning they never go up or down so that offers predictability but the premiums for whole life tend to be higher and more expensive than term life insurance.
Term life insurance provides coverage for a specific period (hence the verbiage “term”) usually 10, 20, or 30 years. Term insurance is generally more affordable than whole life because of its lower premiums, but it has no cash value. You should always make sure the beneficiaries to your life insurance are current. If you have divorced and left your spouse as the beneficiary to the policy, they are legally entitled to the proceeds even though your union is null and void. You also want to make sure that the beneficiary is currently alive and or you can designate contingent beneficiaries or also assign a portion or percentage of the life insurance to multiple beneficiaries. Another thing you should double check is to see if you employer provides group life insurance because some companies self-insure. Also, some social or professional organizations offer insurance to their members. You should always check to see if there is a policy on you and who is the beneficiary because every year in the United States millions of dollars of life insurance go unclaimed.
