After choosing a life insurance beneficiary, there are several things you may want to discuss to help them be better prepared down the road. By organizing finances and thinking through how to use a death benefit, you can reduce future confusion and provide loved ones with clarity during a difficult time. Consider including these five topics in your conversation.
Policy details: Review the specifics of a life insurance policy, including the name of the insurance company, type of life insurance, coverage amount, and if there is more than one beneficiary. Consider providing a copy of your policy information for them to keep in a safe place. Let them know that life insurance proceeds are generally not taxable to the beneficiary, but meeting with a financial professional or tax advisor can provide helpful guidance.
Account information: In addition to life insurance, consider compiling information about bank accounts, credit cards, loans, auto and home insurance, retirement accounts and any investments. Also include important estate planning documents like a will and a power of attorney. Make a list of login details for online accounts and contact information of personal attorneys and financial professionals.
How to use benefits: Discuss how death benefit proceeds could be used, such as covering final expenses, paying off specific debts, creating an emergency fund or funding a child’s education. Talk about how a benefit could be divided if money is needed for multiple purposes. Consider sharing your wishes for final arrangements.
Claims process: Explain the steps involved in filing a life insurance claim, including contacting the insurance company, submitting a claim form online or by mail and providing required documentation (e.g., death certificate and personal identification of beneficiary). If claim is approved, the death benefit is typically paid within 14 to 30 days.
Financial impact: Determine if lifestyle adjustments will need to be made and evaluate how the loss of income could impact short and long-term goals. Discuss if loved ones will need to adjust living arrangements, organize childcare or find additional sources of income to help adjust to a new financial reality. Having a plan in mind can help lower stress if the unexpected happens.
As part of your benefits, we’ve partnered with Empathy, a personalized platform that offers grief support and estate settlement and probate assistance to help families navigate life’s most challenging moments. Following a loss, loved ones can get the resources and compassion they need to find clarity and comfort during these difficult times. Visit www.empathy.com for more information.
