By Rossana Majchrowski
You’ve saved your family members by buying life insurance, but that’s not all — don’t forget that you need to tell them about it too.
You have taken out life insurance. Now that it’s done, you might think you don’t have to think about it anymore. Although buying life insurance gives you some peace of mind that will make you feel like you can move on, there is still an important step to take: you need to tell your beneficiary (spouse, children, brother, sister, business partner, etc.) that you have taken out this insurance.
You must tell this person or these people that you have taken out life insurance and tell them with which company the contract was taken out. Without this information, your beneficiary may not be able to contact the insurer and request payment.
In 2013, it was widely reported that the New York State Department of Financial Services and New York-based life insurance companies recovered over $1.1 billion. US unclaimed life insurance. The American Council of Life Insurers countered that life insurers have paid out $1.1 trillion in claims in the United States over the past 25 years and that 99% of shares are settled quickly. Unclaimed life insurance, therefore, represents a tiny percentage of settled claims.
However, you don’t want your life insurance to add to that number. Purchasing life insurance is a gesture of incredible generosity. You take out a contract and pay the premiums so that your loved ones receive a lump sum when you die. You want to help them financially when you’re gone, leave them a nice legacy or at least help them pay your funeral expenses. But if your beneficiaries don’t know that their name is on your policy, which insurance company you’re dealing with, or how to file a claim, your wishes won’t come true.
Talk about it with your family members.
A 2013 survey by BMO Financial Group showed that Canadians understand the importance of talking to family about their estate but need help doing so. It can be awkward to discuss matters surrounding his estate and death, but it’s important to leave clear instructions with family members so that your estate goes smoothly.
To help you, the Canadian Life and Health Insurance Association, which is an open membership association whose members represent 99% of life and health insurers in Canada, has produced an interactive tool: Everything in its place, the goal is to help individuals manage their personal and family documents — from insurance contracts and medical information to banking, investment and mortgage documents, wills and estate documents.
If you can’t bring this up with your family, you may ask a financial advisor to join the discussion. They can act as a mediator and provide you with other resources to help you work through the issue.
Rest assured, people often take out insurance and forget about it. But talking openly about your estate with family members will ensure that your wishes come true.
