Spring is here. It’s traditionally a time to deep-clean the house and the car, put the yard back in shape, and address the other tasks that beckon when winter recedes.
You may not necessarily associate this time of year with reviewing the beneficiaries on your life insurance policy – nonetheless, it can be a good time to take this important step.
If you’re struggling to find the motivation, think of it as doing a favor for your heirs. Research suggests that people are more likely to accomplish a mundane task if they are doing it as a favor for someone else.1
Time changes everything, including the reasons you bought your life insurance policy and the people you want it to protect. One of the few things left untouched by the passage of time is the sanctity of your beneficiary designations. The people named in the policy will receive the death benefit regardless of your current wishes or what it says in your will.
Major life events such as marriage, birth, divorce, and death can all affect your choice of beneficiaries. By regularly reviewing your life insurance policy, you can help ensure that your priorities are reflected in your beneficiary designations. Here are some questions to ask yourself about the beneficiaries of your policy.
- Can you name them from memory?
- Are they still financially dependent on you? Is the face value of your policy enough to meet their needs if something were to happen to you?
- Are they still living?
- Are there circumstances or people in their lives who might encourage them to misuse the money if they were to collect it today?
- Are the people you would most want to collect your life insurance proceeds the same people who are named as your beneficiaries?
- Are they the same people who would most likely be expected to pay your final expenses and any other expenses or taxes that might be due?
Estate issues can be uncomfortable to confront, but you may actually enjoy reviewing your beneficiary designations. After all, it can be rewarding to choose a loved one or a favorite cause to potentially receive a substantial amount of money.
1) The Wall Street Journal, December 18, 2007
©2008 Emerald Publications