Part 3 of a series
In my last article, I pointed out the importance of a clear plan for your loved ones. We discussed how a will creates peace of mind, reducing the risk of disputes among beneficiaries and easing dealings with financial institutions. That brings us to life insurance.
You should have your life insurance policies gathered in one place and confirm they are active. Know what type of policies you have. The two most common are whole life and term life.
Whole life offers lifelong coverage as long as you continue paying premiums. It also builds cash value that grows over time and can be borrowed against. Premiums are fixed, providing predictability, though they tend to be higher and more expensive than term life.
Term life insurance provides coverage for a set period—usually 10, 20 or 30 years. Term is generally more affordable because of lower premiums, but it has no cash value. Always make sure your listed beneficiaries are current. If you divorced and left a former spouse as the beneficiary, they are legally entitled to the proceeds even though the marriage is over. Be sure your beneficiary is still living, and consider designating contingent beneficiaries or assigning percentages among multiple beneficiaries.
Check whether your employer provides group life insurance, as some companies self-insure. Also, many social or professional organizations offer coverage to their members. Millions of dollars in life insurance go unclaimed each year in the United States, so it’s important to know what policies exist in your name and who the beneficiaries are.
The next group of papers you should organize includes your birth certificate and marriage license. A birth certificate serves as proof of identity, citizenship and age. It is required for school enrollment, applying for a Social Security card, receiving government benefits, enlisting in the military, obtaining a passport and in some court proceedings.
A marriage certificate serves as official proof of marriage and is often required in legal and financial matters. For example, it is necessary if you want to legally change your name to your spouse’s last name, file taxes jointly, apply for joint bank accounts, mortgages or credit cards, or add a spouse to health insurance or other benefits.
Other documents to organize include your military discharge papers and Social Security information. A military discharge is a formal release from active duty. The most common is an honorable discharge, which makes veterans eligible for a wide range of benefits, including the GI Bill, VA health care, disability compensation, pensions, housing grants, small-business support and burial in a VA national cemetery.
Your Social Security number is used primarily to calculate and provide benefits. These include retirement payments starting at age 62, disability benefits, survivor benefits for spouses and children, Medicare eligibility and Supplemental Security Income (SSI) for those 65 or older, blind or disabled with limited resources. Keep the most current Social Security benefit statement on file.
We will discuss the next step in my upcoming column. Thanks for reading.
Andrew B. Hoffman is a funeral director at Jeffries and Keates and Keates-Plum Funeral Homes. He is a twenty-two year veteran of the funeral industry.
