When I got my kids a dog, I had no idea that it could affect my homeowners insurance. I happened to run into my insurance agent in the store when I was buying dog food and he asked me what kind of dog we had. When I told him, he said I should stop in the office the next day. I had no idea that things like this could affect premiums, so I started asking what else could do it as well. I created this site to help others understand some of the finer points of homeowners insurance and what they should think about to manage their rates.
Investing in life insurance is one of those responsible things to do to ensure your loved ones do not get left with a burden when you pass away. However, just like any form of insurance, there are huge mistakes you must avoid to ensure your envisioned plan works out as it should in the end. This is especially true when it comes to naming beneficiaries. Just one mistake can create some huge problems upon your passing. Check out these common beneficiary mistakes to avoid with your life insurance policy and what you will need to do to avoid them.
Mistake: Not listing secondary beneficiaries on your policy.
Why? You list your significant other as the primary beneficiary on your policy and see no reason to name any other beneficiary as a secondary recipient. If you leave this as is and something happens to that primary beneficiary, the insurance company will not know who should receive your life insurance funds upon your passing. It is always best to list at least a few secondary beneficiaries on your life insurance policy because of this.
Mistake: Naming your estate as the beneficiary of your life insurance policy.
Why? Many life insurance policy holders choose to leave their own estate as the beneficiary upon their passing. While this is an open option with most insurance companies, it is not always the most financially logical decision. Life insurance benefits paid to an estate can be subject to far more state taxes, such as estate and inheritance taxes, in some situations. Plus, your life insurance funds being part of your overall estate can mean that creditors have full access to the funds before your family members, which can mean you will not be leaving them as financially secure as you would like.
Mistake: Appointing beneficiaries and not reviewing them down the road.
Why? If there is one thing that is consistent about life, it is change. The beneficiaries you appoint now may not even be in the picture five or ten years down the road. There are all kinds of reasons it will be logical to change your beneficiaries, such as if you get divorced or if a loved one passes away. Those beneficiaries you have listed when you pass away will be entitled to the funds, sometimes without regards to the changes that have taken place in your life circumstances. To avoid issues, it is always a good idea to review your beneficiary designations every few years.
For more information, talk to a professional like D A Insurance Brokers.
Share27 March 2017
