Life insurance protects your family from negative financial impacts after your death. It’s a product that you can purchase now to protect your loved ones in the future.
Purchasing and maintaining life insurance coverage is straightforward, but that doesn’t mean your job is done once you’ve singed the dotted line on a policy.
Here are some things to keep in mind after you’ve purchased your life insurance policy.
Your beneficiary is the person or legal entity who will receive the death benefit from an active life insurance policy. As the policyowner, it is your responsibility to name at least one beneficiary who will receive your policy’s payout.
If you haven’t named a beneficiary before you die – or your beneficiary dies before you – your life insurance proceeds go toward your estate. If your estate must go through the probate process, it can subject your death benefit to creditors and estate taxes.
In such a case, your estate beneficiaries must wait for probate process completion before accessing the funds, if estate debt and taxes don’t deplete the payout. Furthermore, your money may never reach your intended beneficiary if they aren’t part of your estate plan.
Update your beneficiaries whenever something changes in your life – whether it’s having a child, getting married or divorced or making a large purchase.
Contact your life insurer for a change of beneficiary form.
Whether you have group life insurance coverage through a civilian employer or SGLI through your military service, your coverage does not stay with you after you leave your job. That means your beneficiaries will only receive the death benefit if you die while you are still working.
Getting coverage outside of work ensures your family will have a financial safety net, regardless of your employment.
Additionally, group life insurance through your employer may not cover your entire family. For example, SGLI maxes out at $400,000.
The cost of life insurance increases as you age and as your health declines.
Many life insurance companies will ask you to undergo a medical examination with your application, so it’s important to be as healthy as possible be when you apply so that you qualify for the best rates. Unfortunately, many people don’t think of life insurance until it becomes clear that they need it – often later in life after acquiring a health condition.
The longer you wait to buy coverage, the more expensive it can get. Start shopping quickly whenever something changes in your life that increases your coverage need – don’t procrastinate!
Though it can be uncomfortable to talk to your loved ones about death, consider informing your beneficiaries of their beneficiary status. Providing them with policy information (including the insurer’s name, contact information and your policy number) will make it easier for them to initiate a claim when the time comes. It can also help avoid claims process delays.
You can also use the conversation as an opportunity to provide insight into what you would like your loved ones to do with the proceeds from your death benefit.
For all your life insurance needs, Navy Mutual is here to help. We proudly do everything in our power to provide affordable life insurance products to current and former servicemembers and their families. To speak a representative about your family’s needs, call 800-628-6011.