Life insurance is a very serious policy that can help your family stay financially afloat should you pass.
Life insurance is a great policy to have in order to give your family some financial cushion after you pass. Taking your life insurance policy seriously is the only way you will be able to offer your family the coverage they need. Here are the life insurance mistakes you need to avoid.
Mistake #1: Naming your estate as the beneficiary
If you name your estate as your beneficiary you expose it to needless inheritance taxes or to a higher rate than if the proceeds were made to a named beneficiary. This mistake could also prolong your family from receiving their necessary funds.
Be sure to name a real person as your beneficiary, and be as specific as possible when making this person.
Mistake #2: Failing to review your policy every three years
It’s easy to forget about your life insurance policy after a few years. You know you have it, but you forget the specifics of it–you forget who the beneficiaries are, what is covered, and how much your policy offers as a death benefit. By reviewing your policy every three years, you are able to make sure that your beneficiaries are up to date and you make sure that death benefit covers every expense that your family requires.
Mistake #3: Your underage children are your beneficiaries
The problem with naming your underaged children or grandchildren is that they are legally not allowed to receive the benefit due to their age. The court will appoint a guardian to oversee the death benefit, which could spell trouble for your children’s money. Instead set up a trust for your young beneficiaries and name the trust as the recipient of your life insurance proceeds.