Life insurance is a purchase only made once or twice in a lifetime, so it is common to be unaware of the ins and outs of policy protection. The potential pitfalls are significant, however, so review the following tips and learn how to buy life insurance like a pro.
Life insurance policies are generally sold by highly commissioned sales people or by order takers. In either case, you need to be sure you are in the know, before you buy, lest you get sold a policy or amount you don’t need, or you overlook the types and amounts that are right for you. We can help you make objective decisions about your insurance needs, with no commissions payable to us, so you know you’re getting our 100% on your side analysis.
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If you’ve named a minor child as a beneficiary, or even a secondary beneficiary, after your spouse, you could be creating double trouble. First, your life insurance would have to go through a court process and subject to the control of a financial guardian, and then second, whatever is left would be distributed to your minor child when he or she turns 18.
You can easily avoid this by naming a trust as beneficiary of your life insurance, thereby keeping your life insurance out of court and ensuring your child doesn’t receive control until he or she is ready. Plus, then you get to decide who takes care of the life insurance money you are leaving behind, until it’s distributed to your child. And, you can even build in protection against your child’s future divorce, or any creditor issues.
If you receive child support and alimony, insist that your spouse have a term life insurance policy to guarantee you are able to collect on your settlement, even if your ex-spouse dies while still paying out your divorce settlement.
Experts suggest most people only need life insurance to cover their working years and while they raise a family. Term life insurance is typically affordable and covers you when you need it most. Permanent insurance is best when you know you will have estate taxes to cover OR if you want to use insurance as an investment vehicle with guaranteed returns, but often big commissions to make up in the early years of the policy. One of the services we provide to our member clients is to review all insurance policies, both in place and those being considered, to provide objective evaluation before you buy.
A living benefits rider could allow you to access funds if you were diagnosed as terminally ill or with a chronic and debilitating condition.
If you are ready to purchase a life insurance policy that works for you, start by sitting down with a Personal Family Lawyer®. As your Personal Family Lawyer®, we can walk you step by step through creating a financial plan that will help you provide for your family no matter what. A Personal Family Lawyer® offers Family Wealth Planning Sessions that help you protect and preserve your wealth for future generations. Before the session, we’ll send you a Family Wealth Inventory and Assessment to complete that will get you thinking about what you own, what matters most to you, and what your wishes are when you die. Schedule online.
I have five children, two of my children have special needs and one is my step-daughter. On a deep level, I understand how every family has special gifts, dreams, fears and goals and I am deeply committed to be your trusted advisor who helps you make the very best personal, financial, and legal decisions for your family throughout your lifetime.