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5 Things Every Life Insurance Policy Holder Needs to Do Now

You may feel like a great weight has been lifted off your chest once you buy your life insurance policy, but there are still some things you should consider taking care of once the policy is purchased.

  1. Name a beneficiary. Life insurance death benefit proceeds do not need to go through probate – unless they are left to an estate. So if you have left your primary beneficiary election black or wrote in, “Estate,” then you could cause your family a lot of additional grief after your death. Talk to your insurer about naming a beneficiary so that you heirs can utilize the death benefit proceeds quickly after death, instead of waiting through probate.
  2. Name a contingent beneficiary. Many people leave their contingent beneficiary choice blank on their life insurance application, assuming that they don’t need to make that election. Unfortunately, if your primary beneficiary passes away before you, then your lack of naming a contingent could be making it difficult for your beneficiaries by putting them into that same probate situation outlined above. Name a contingent beneficiary and you can avoid this.
  3. Put copies of your policy with your other estate planning documents. This will make it easy for your family to find the policy and insurance company contact information after you’ve passed on.
  4. Set up auto draft payments. It’s easy to forget to pay your life insurance premium, especially since it isn’t something you will use as often as all the other types of insurance protection you have. Go ahead and set up an auto draft either through your bank or the insurance company so you can keep your policy in-force, even if you forget about it.
  5. Create an annual review reminder. Your life insurance needs don’t stay static – they change almost every year as you reduce or increase your debt, as your kids get older, as you have more kids, as your net worth grows or shrinks, etc. Make an appointment on your calendar to update your life insurance policy annually.

April 13, 2011

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