Life Insurance: 5 Things to Discuss with Your Family Before Committing to a Policy

Angelena Iglesia

If you are a working adult with “people liability”, buying a life insurance policy is highly recommended.

Purchasing the insurance policy isn’t just all that you have to do. You should also make sure that the beneficiaries of this plan know the specifics and how to claim it. Discussing matters like this with loved ones might be awkward but you need to muster up the courage else, all you have worked so hard for and prearranged before death will remain unclaimed.

Before committing to a policy, you should also ensure that you choose a reliable company. On you will find customer reviews on various insurance companies. This will help you in selecting which company you deem suitable enough.

Here are 5 things that you should discuss with your family before committing to a life insurance policy.

1.  Who your beneficiaries are

If your beneficiaries don’t claim the policy when due, it might take a long time for the insurance company to track them down. Most times, the beneficiaries don’t even know about the insurance policy. This is why you should inform your family who the beneficiaries are. The funeral bills and other possible financial burdens will be eased if the beneficiaries are aware of and claim the policy. It will also prepare them for where the money can be distributed.

2.  Your policy’s exclusions

Your family must be aware of the circumstances that the insurance policy does not cover. For instance, many life cover policies do not cover deaths due to some health conditions, suicide or self-inflicted injury. The policy schedule should contain important information as these so that you are fully aware of all exclusions. Informing your loved ones about the terms of the policy will help them become more aware of what their rights cover when making a claim.

3.  Your debts and liabilities

It is worthwhile to keep your partner aware of all your finances. This is important so your partner has an idea of your assets and liabilities when you are no longer with them. This enables them to sort out the priority list of debts to pay off once they’ve received payment as beneficiaries. Also, if you have any personal accountant, financial advisor and lawyer, you should make sure your partner or close relatives know about them. This information will help your family out of any lingering financial issues.

4.  How you would like them to spend the money

While it is important that your mortgage, credit card debts, car loans and other outstanding debts must be paid off, it is also a good idea to make room for special use of the money. If you wish to give some of the money out to charity or for a holiday for your family, you should inform them. This is also one of the ways they can honour your life.

5.  Where you store the details

It is also important that your family knows where to find the insurance documents. It is recommended that you store the documents in both hard copy and electronic formats. Both storage formats should be made known to them.

Keeping your family informed about your life insurance policy will go a long way in easing them out of financial hardships after a difficult event.

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