Preparing Your Life Insurance Beneficiary: 3 Steps to Handle Now

I have written several blog posts over the years about insurance of all kinds. Insurance is so important to have for many reasons, but it is also a very unpleasant thing to think about, discuss, and to shop for and buy. That’s mainly because you are hoping you never really need it, but yet you know that you will or just might someday. That’s why you pay for it so grudgingly. It’s protection for you and your assets for the things that your fear will happen.

Grieving loved ones who were prepared to be your life insurance beneficiary

With things like a house, a car, or a boat, well, they are all just things. When it’s just a thing, insurance can cover it and even replace it so you’re as good as new…well almost. Just ask anyone who just experienced Hurricane Ida and all of the damage done to property for example. But with your life insurance policies it’s a little bit different.

That is because the biggest responsibility in life may be how you prepare for your death. So what do you need to do to prepare now with your life insurance?

Do You Really Need Life Insurance?

Today’s post is not about the debate of “if or when” you need life insurance. I covered that in Why You Need Life Insurance and also Why You Need Life Insurance Whether You’re Young or Old. I also covered the different types of life insurance and why you might need more than one kind. Read them because it does depend on many factors to answer the if and when.

But the truth of the matter is that most of us have things and money we do want to leave to others and/or organizations and charities when we pass on, so being well prepared in advance under any circumstances is always the best agenda. That’s true whether you have life insurance or not.

The Great Responsibility That Comes with Life Insurance

If you’ve ever been responsible for planning a loved one’s final arrangements, you undoubtedly recall that sad, stressful time. You probably also remember which aspects came together fairly easily and which ones didn’t.

If the logistics around life insurance was one of the more difficult tasks, you want it to be different for your loved ones. You want your life insurance beneficiary to receive your benefit quickly, with minimal effort on their part. That doesn’t always happen and yet it is something you can make much simpler for them if you prepare for all of it in advance.

I have read many articles published by insurance companies and their knowledgeable claims experts. In them they have shared their best tips for you that will help make it easier for your loved ones to receive those very important life insurance benefits quickly and easily. I am now sharing them with you, so read and follow these items now. Doing them while you have the time and energy to deal with this subject (without any pressure and complications that can come) will make this much easier for you and your life insurance beneficiaries.

The 3 Most Important Things You Can Do with Your Life Insurance Policy Right Now

1. Check your life insurance beneficiary designations

Checking and updating your beneficiary information is always a good practice, especially after any significant life changes in your life such as a birth, marriage, divorce, or a death in the family. Once a change is made, tell the beneficiary of your changes and new choices whether you added or removed them from your insurance policy. Healthy communication can prevent confusion, arguments, and disappointments when this is all being dealt with after your passing. Nothing is more difficult to deal with for your family than arguing over someone’s estate along with the death of their loved one.

What happens if you don’t list any life insurance beneficiary on your policies? If you don't list a beneficiary or your named beneficiary hasn’t been updated and is now deceased, the benefit goes to your estate or trust. This can mean your family will have to wait weeks and even months longer to have access to any assets or the funds you leave behind.

2. Clearly and concisely name your beneficiaries

When you hear the word “beneficiary”, you probably think of a family member or loved one. That’s pretty common, but, in fact, your beneficiary can be anyone or anything including a charity or even a funeral home. It all depends on the rules of the state in which you live in when you pass on.

Whoever or whatever you make your beneficiary, just make sure to give your life insurance provider all of the identifying information such as their full legal name, date of birth, and address so they can be contacted quickly and easily when the time comes.

Quite often family members are difficult to locate and when that happens, it can delay the distributions.

3. Prepare your beneficiary to file the claim

When it’s time for your beneficiary to collect your life insurance benefit, they’ll first need to notify your life insurance provider to learn what’s required for them to file a claim.

This can be a very stressful time for them so preparing the information they need in advance can help ease that pain. Here are a couple of simple steps you can take so your loved ones are prepared:

Tell your family where you keep all of your insurance policy information and other important documents. It’s recommended that they be kept in a fireproof box or other secured area so that nothing can be altered or lost. But make sure the documents are accessible so your beneficiary can gather them quickly.

Take the time to educate your life insurance beneficiary about your coverage and how to claim the benefits. For a speedier claims process, your beneficiary should know almost as much about your life insurance policy as you do. It’s a good idea to actually sit down with the person who you designate to distribute the proceeds of your insurance to others and organizations well in advance of the actual need for it.

Final Thoughts

It’s a tough subject to think about, but life insurance and preplanning for after you pass is one of the most important things you can do for yourself and your loved ones.

It takes just a little time in preparation to help ensure a smooth claims process. Best of all, you can begin preparations as early as today. Start by getting a free copy of your insurer’s planning kit. This is a convenient place to record everything from your coverage information and funeral plans to the people you wish to be notified and even more. Your insurer will be glad to assist you with this and usually you can get it just by calling a toll free number and making a request for it (for free). Or if you want something more comprehensive, you can purchase this Family Emergency Binder with fillable pages to be prepared for any emergency.

By keeping your important information organized and accessible, and maintaining good communication with your life insurance beneficiaries, you’ll help them be better prepared.

Do you have a plan in place for your beneficiaries? Have you updated your policy information lately and is it now current? Have you notified the key people to your plans and do you have your information secured and ready to use when needed?