Category: Life Insurance

How AI Is Disrupting the Insurance Industry

How AI Is Disrupting the Insurance Industry

There’s a reason life insurance underwriters, agents, and customer service reps are venturing out from their statistics-laden, fluorescent-bathed hovels to cheer their industry’s latest disrupter, algorithmic underwriting.

Artificial Intelligence algorithms have transformed traditional error-prone processes into an efficient, streamlined experience for both them and their customers.

How AI Improves the Insurance Life Cycle

AI machine learning, also called accelerated or automated underwriting, allows insurance companies to collect the kind of data necessary to provide predictive analysis about mortality and financial risks through “insurtech” software that streamlines the insurance process from quote to claim. This helps insurers make more granular decisions about the risk you pose and the premium you will pay.

The remarkable thing about machine learning is that the technology continues to refine the data it’s collecting in real time. The more data collected, the smarter the system and the more accurate the decision-making becomes.

What’s even cooler is that a behavioral intelligence component uses “digital body language” such as keyboard hesitation and backspacing to determine policy pricing and protect against fraud to weed out the application liars from the truth-tellers.

And it helps identify complex risk issues using third-party data, like pharmacy prescription histories and credit agencies, electronic medical records, and the like.

How AI Benefits Insurance Providers

Insurtech technology is flexible enough to tailor to any business model and allows underwriters to work quicker and more efficiently so they can turn their attention to strategy and value-added products.

To illustrate, insurance companies currently depend on just a few questions like age, gender, and smoking and drinking habits to rank people in categories standard, standard-plus, preferred, and preferred plus, which determine premiums. AI can drill down a bit deeper on the front end to provide more tailored and accurate predictions about mortality and lapse probability.

Behavior technology detects fraud by issuing red flags based online behavior. Those alerts send the applicant to a live agent who can further vet them over the phone and in some cases send them for a medical exam before granting the policy.

The system also scales for both its intuitive data library and revenue growth generated outpacing the costs of doing business. This enables agents to provide prospects with quicker answers and reduces human errors.

How AI Affects Life Insurance Policyholders

Chatbots already create a more streamlined quote process, taking care of simple data collection so agents can have a more substantive conversation with prospects later. Insurtech enables them to offer life insurance products more tailored to your individual needs rather than the current one-size-fits-all options.

Insurtech technology also works on the back end, providing family members with a quicker insurance claims process to get the financial support they need to them quicker.

And it saves everyone money by reducing rising insurance costs due to fraud, which increases trust between policyholder and provider.

Because in the end, the better the data, the better the decision-making.

Don’t Let Rising Gas Prices Drag You Down

Don’t Let Rising Gas Prices Drag You Down. How to Budget to Beat the Economic Blues.

Mark lived through the high inflation and gas crisis back in the 1970s and felt lucky to have stayed in his house, put food on the table and send his kids to college.

During his prime earning years, he maintained that life was short. You do what you can to get by and enjoy as much of it as you can while you do it. He didn’t really think about tomorrow. He was too focused on getting through his day with as much joy as possible.

Now he’s living with his kids.

According to a MarketWatch report, 56% of Americans live paycheck to paycheck, including those making six figures. Gas prices currently hover around $5 per gallon and inflation recently rose to 8%.

Scary, right? Now is as good a time as any to learn how to create a budget and stick to it—no matter what.

If you balk at living with a budget, think about living out your golden years surrounded by the noise, sticky surfaces, and general stinkiness your grandkids will create every single day of those years. Like Mark does.

How to Set a Budget

Budgets allow you to see in black and white where your money is going and helps you steer your financial ship to keep it away from the rocks.

Here are a couple of steps to help you build your ark:

1. Set your budget at the beginning of each month.
   Budget using the income you will actually receive, not what you’re hoping to receive.
   Make budgeting a family affair that everyone invests in. Everybody benefits from a financially healthy home. No one benefits from a rogue spender.
   Know that you can always adjust your budget every couple of months. If one line item consistently comes in lower than expected, put the remainder in another category—preferably savings, but a line item for vacations or holiday gifts is also an option.
2. Determine what’s a fixed expense and what’s a variable expense. A fixed expense like a mortgage or car payment is self-explanatory. A good tip for establishing a variable amount is to take the average you spent on the variable for three months and set that amount as the line-item figure.
3. Place needs ahead of wants.
   Savings should always come first. Take 20% of your monthly income and put it in savings.Essentials that affect your physical and financial wellbeing should take up 50% of your monthly income. A useful list in order of priority includes:

1. 1. Savings (there it is again)
   2. Food
   3. Rent
   4. Utilities
   5. Credit card and loan payments
   6. Car payment
   7. Gas (Yep, car stuff is at the bottom. It’s an essential, but not at the top when you consider you can bike, use public transportation or ride share to work.)

Non-essentials like restaurants, streaming services, and that $4 Starbucks that enhance your lifestyle should take up the remaining 30%. Non-essentials are essential. If there’s something you really want, figure out how much of your essentials budget you’re willing to save and then figure out how many days or weeks it will take to buy it.

Saving tips:

• Once you’ve paid off your credit cards, you can allocate that money to accommodate any rising costs in essentials or put it into savings.
• Make it a goal to build up three to six months of savings to cover your expenses in case of emergencies.
• If you have direct deposit, steer some of your paycheck directly into a savings account. And devote part of that savings to a retirement savings plan.

How to Fight Rising Gas Prices

The best thing you can do for your wallet besides dusting off your bicycle or hopping the bus to work is to make your car as efficient as possible. Some things to do to decrease the things that make it work harder:

• Change the air filters.
• Keep your tires road ready. Proper tire pressure can save up to thirteen cents per gallon.
• Don’t idle. If you know you’re not going anywhere for a while, turn off your car.
• Same for parking. Turn it off.
• Turn off the AC and open your windows.
• Take off your racks and carriers. They create wind resistance that strains your engine, thus requiring more gas.
• Clean out your car to lighten the weight your car’s carrying.
• Combine errands into one trip.
• Slow your roll. Adhere to the speed limit and accelerate slowly.

Invest in Your Future and Protect Your Family

With the world in not only financial turmoil but suffering increasing episodes of violence, it may be time to reframe your life insurance choices. Specifically, a permanent life policy that accrues cash value as well as provides a death benefit should the worst happen.

If you currently have a term life policy, consider converting it. This will not only build wealth but will save you from having to submit to a medical exam—an extra bonus if you’re starting to notice your health changing as you get older.

Mark would have benefited from these tips if he’d had them and heeded them. But he didn’t. And now he’s trying to make the best of things while he helps his daughter-in-law change diapers and fold towels.

Best of luck, Mark.

Mortgage Protection Insurance.
Life Insurance for Your Home.

Mortgage Protection Insurance. Life Insurance for Your Home.

If you have a family, life insurance is a must-have. If you have a home, insurance that covers your mortgage is equally important.

But how best to insure your home?

There are essentially three ways:

• Mortgage Protection Insurance
• Term Life Insurance
• Private Mortgage Insurance

How does Mortgage Protection Insurance protect my home?

If you should pass away before you pay off your mortgage, Mortgage Protection Insurance (MPI) will pay your mortgage balance. This ensures your family remains in your home without worrying about how they will afford to stay there.

An MPI payout goes directly to your lender, not your beneficiary. And its payout amount correlates with your mortgage balance.

Mortgage Protection Insurance also goes by the name of Mortgage Life Insurance.

How does Term Life Insurance protect my home?

With a term life insurance policy, you determine your death benefit amount. This enables you to roll your mortgage into your term policy, which will pay off your mortgage along with addressing other financial concerns such as your lost salary, education costs, burial costs, and accrued debt you want to shield your family from having to pay.

So which one is better?

Mortgage Protection Insurance v. Term Life Insurance

The best choice between life insurance and mortgage protection insurance comes down to what makes sense to you and your family financially.

MORTGAGE PROTECTION INSURANCE

• Easier eligibility, even if you cannot qualify for any other type of life insurance.
• Premiums may be more expensive.
• Your mortgage lender is your beneficiary.
• Death benefit payout is tied to your mortgage principal. In some cases, your payout decreases as your principal decreases.
• The length of time it takes to pay off your mortgage determines how long your insurance policy lasts.
• Some policies only pay out if your death is accidental.
• No medical exam required.
• If the payout does not cover the amount owed on your mortgage, your family must pay the balance.
• The younger and healthier you are, the less you pay in premiums.

TERM LIFE INSURANCE

• You can be turned down for a policy due to poor health or a risky hobby.
• Lower premiums.
• You choose your beneficiary
• Your death benefit amount does not change.
• You determine the length of coverage, anywhere from 5 to 30 years.
• Death benefits paid upon your death, no matter what the cause.
• Medical exams required by some insurance companies.
• Your family is free to use the payout however they wish.
• Same.

So what is Private Mortgage Insurance, then?

PMI is insurance your lender may require you to purchase and pay as part of your mortgage payment—especially if your down payment is less than 20% of the home price. PMI protects the lender, not your family. You cannot cancel PMI since it’s rolled into your mortgage payment.

You are free to cancel both an MPI and a term life policy whenever you like.

How to qualify for Mortgage Protection Insurance

Insurance companies consider the following when making underwriting decisions that determine your eligibility and premium payment amount:

• Your mortgage balance
• Your age
• Your health
• Your credit score

Takeaways:

• Mortgage Protection is exactly what it says it is. It protects your home and the family who lives in it in the event you die unexpectedly.
• If you’re a homeowner who cannot qualify for any other type of life insurance, MPI is your best bet for protecting your family against losing their home if the unthinkable happens.
• If you want more control over your coverage, premium, and payout, term life is your best choice.

Compare life insurance companies today

Best Life Insurance
for Seniors

Best Life Insurance for Seniors

As much as we don’t want to face it, life is terminal. And if you’ve reached your golden years without a life insurance policy, those premium costs are more costly than they were when you were younger. As your age climbs, so do your premiums.

But there is affordable insurance for seniors. And the healthier you are, the less you’ll have to pay.

Affordable Life Insurance Available to Seniors

• Permanent Life Insurance
• Term Life Insurance
• Final Expense Insurance

Permanent Life Insurance for Seniors

As the population of senior citizens has grown during the last two decades, so has the need for flexible insurance options. Permanent insurance is one of those options.

Although more expensive, permanent policies  provide coverage with reliable death benefits for the life of the policyholder. In addition, permanent life insurance allows you to accumulate cash value that you can use to help pay your mortgage and other debts or supplement your retirement. However, if you do not pay back the amount you withdraw before you pass away your beneficiaries will not receive the full benefit.

Term Life Insurance for Seniors

If you aren’t interested in accumulating cash value and want a more straightforward policy, a term life policy fits the bill with a lump-sum payout and an unchanging premium. You control how long you want coverage and the death benefit amount.

However, unlike a permanent policy that provides coverage for life, a term life policy covers a specific period of your choosing. No more, no less.

And although some term life policies do require a medical exam, the application process for a term life policy is easier than for a permanent policy.

Burial Insurance for Seniors

Burial insurance, also known as final expense or funeral insurance, covers only your funeral and burial costs.

And although it provides a smaller death benefit, it requires no medical exam.

If you’re concerned about covering any medical care costs should you become critically ill, you may want to consider an accelerated death benefit that allows you to access your payout early. This can reduce the death benefit your family receives, but you do not have to pay it back.

Things to Consider Before Purchasing a Senior Life Insurance Policy

• your general health. If your health is poor, you may want to purchase a no-exam policy.
• your financial goals. If you want access to extra cash, a permanent insurance policy may be a viable choice.
• how much coverage you think you will need to pay off debts like your mortgage, outstanding medical bills, and expected estate tax as well as how much you would like to leave behind for your family.
• your estimated burial expenses

Things to Consider When Shopping Life Insurance Companies for Seniors

Before landing on your choice of company, make sure you have investigated the following conditions:

• that they provide the kind of coverage you need
• their maximum age for coverage
• their online term application process
• the company’s stability and its ability to pay benefits. You want a company with an A grade from a source like AM Best
• the quality of their customer service. A useful resource is the NAIC.
• any dividends you would like to accrue
• any riders or other conditions that may reduce your death benefit

Reasonable life insurance for seniors is out there. Make sure you make the right choice. Shop senior life insurance rates today.

What Does Mindfulness
Have to Do with Meditation?
How Does It Improve my Health?

What Does Mindfulness Have to Do with Meditation? And How Does It Improve my Health?

You probably know that you don’t have to devote your life to sitting on a mountaintop to get the serenity you see glowing from a Tibetan monk.

Yet people make mindfulness and meditation practice way more complicated than they are. Just three minutes a day—the time it takes to brush your teeth (if you’re doing it right)—can yield a calmer mind and promote a longer, healthier life.

What does Mindfulness even mean?

Mindfulness is being fully present in the moment – with your kids, at work, with your spouse. It’s accepting that you can’t be in two places at once and instead focusing all your attention on what’s in front of you.

Non-mindfulness is ruminating about your child’s problems at school while you prep for an important work presentation.

Actually, as you’re reading this, you’re already in a mindful state. And even if you’re eating a sandwich while you do it, you’re focusing most of your attention on what you’re reading. Mindfulness follows a chain of command: Your thoughts control your mind and thus your body, in that order. i.e., If your thoughts are following the words, then your mind is engaged with what you’re reading and your body reacts in big or small ways. Sighing, nodding…perhaps chewing.

We’re constantly reacting to what we think.

What does meditation have to do with mindfulness?

Meditation promotes mindfulness by training us to focus intentionally. It’s like a baseball player performing drills to ensure he makes the big catch during the big game.

But make no mistake. Meditation is not about getting rid of your thoughts. It’s about observing them not with judgment but with curiosity.

Meditation can be as simple as a quick body scan or as in-depth as sitting quietly for three minutes or an hour if you choose. The benefits are the same—if practiced every day.

Is interrupting my day for this worth It?

It is if you value your health. Anxiety and depression pose great risks to both our physical and emotional health. Anxiety affects almost every system in your body: cardiovascular, digestive, respiratory, and neurological. Depression affects your concentration, appetite, and sleep and can lead to suicide.

Aside from anti-depressives, mindfulness and meditation are the most effective ways to ease both.

Is interrupting my day for this worth It?

According to empirical research, meditation:

• Improves sleep
• Lowers cortisol, a stress hormone
• Reduces blood pressure
• Boosts memory, focus, and cognitive flexibility (there’s growing research that mindfulness training can alter your brain’s structure—not a bad deal if you’re concerned about the brain cells you may have killed during those college drinking binges.)
• Regulates your mood, which helps improve your relationships, which, as we all know, can be a major source of stress itself

And not for nothing, but daily meditation can reduce insurance costs. Heart disease is in the top three insurance underwriting risks. And anxiety accounts for a good many heart problems. Meditation and mindfulness calm anxiety.

Other than taking time out to sit quietly for a few minutes, there aren’t any downsides to mindfulness or meditation. Plus, Lebron James, Jeff Weiner, Michael Jackson, and Bill Gates do it. So why not give it a go?

How do I practice mindfulness meditation?

• Set aside time in your schedule for however long you’ve chosen to practice—even if it’s three minutes.
• Sit. You can choose a chair or the floor, wherever you’re comfortable.
• Close your eyes and observe what’s going on in your body through your muscles and your senses. If you need something to keep your thoughts in the moment, observe your breath as you inhale and exhale.

Most importantly, don’t judge what comes into and out of your mind. Take an “oh that’s interesting” approach rather than an “Ugh, my shoulders are tight. I should schedule a massage.”

If the “should” thoughts become louder than the “that’s interesting” thoughts, just keep breathing. Awareness is a marathon, not a sprint. The more you do it, the easier it comes.

If you want to really dive into the topic, here’s some resources:

• Meditation apps like Headspace and Calm
• Cognitive therapy
• Hire a meditation coach
• Try online guided meditations

Reduce future stress with affordable life insurance.

Browse life insurance companies online

Statistics May Make You Hold Your Loved Ones
a Bit Closer than You Did Yesterday

Statistics May Make You Hold Your Loved Ones a Bit Closer than You Did Yesterday

If you have young kids, you’re probably hugging them a little tighter these days after what unfolded at Robb Elementary in Uvalde, Texas, recently, just as you may have held your spouse a little closer after the mass shooting in Vegas a couple of years ago. Whatever your beliefs surrounding gun ownership, any death is a tragedy, no matter how it happens.

And regardless of the ongoing debate about gun control, statistics from the CDC reveal that 45,222 people died from gun-related incidents in 2020. If you do the math, that’s about 124 people daily.

In the week following the Uvalde elementary school shooting on May 24, 2022, statistics gathered by the Gun Violence Archive reveal there were at least 12 more mass shootings over the following three-day holiday weekend, which both the Congressional Research Service and the FBI define as more than four people shot within close proximity and timeframe.

How Do These Statistics Affect My Insurance?

As of right now, being a fatal victim of any gun-related incident will not affect your life insurance payout –even if you have a gun in your house—if your death is ruled manslaughter or homicide.

Gun-related fatalities still trail far behind mortality rates after COVID, heart disease, and cancer. And although suicides account for most gun-related mortalities, most insurance companies honor death benefits for a suicidal death after two years of paid coverage.

An article in Actuary Magazine said that life insurance companies aren’t taking direct underwriting action regarding gun violence but are monitoring the issue. A quote from the article: “The Surgeon General’s reports on smoking and health were controversial; however, this did not deter actuaries from studying the issue.”

The recent rise in gun-related deaths does not affect premiums either. Although risky hobbies or behavior may affect your premium or ability to receive coverage, being at the wrong place at the wrong time is not considered risky behavior.

Did you know? Firearm-related deaths have overtaken car crash mortalities? As stated earlier in this post, 45,222 people died in 2020 of fatal gunshot wounds, as opposed to the 40,698 people who died in a car-related fatality. On average, people spend about eight hours a week in their car. A 2019 report by the Insurance Information Institute cited that the lifetime odds of dying from an assault by firearm compared to a motor vehicle accident was 289 to 107, respectively.

It’s easy to fall into the mindset of “It can’t happen to me. Places like Chicago are more dangerous than where I live.”
But it’s all relative. Chicago may have an average of 700 gun-related homicides a year, but more than 5 million people live there. A rural area may have only 10 gun-related deaths, but it has a smaller population. If you calculate rates between the two populations based on gun deaths per 100,000, the numbers suggest that the bigger and smaller population areas fall in roughly the same average range.
The fact is, we’re all mortal, no matter how we go out. But the stats reveal that the world may be a more violent place than it used to be, which makes protecting your family as much as possible a priority.

Protect your family’s financial future at the lowest rate possible.

Check out our online term life insurance quotes

Navigating Your Financial Foundation in an Inflation Nation

Navigating Your Financial Foundation in an Inflation Nation

Just when you’ve reached a place in life where you need the big-ticket items the most – a bigger home for your growing family, furniture for that new house, a bigger, more practical car for your growing family—Inflation 2022 hits, and those things move farther away.

You’ve probably heard that the cost of inflation is the highest it’s been in 40 years. For many of us, it’s our first inflation experience. And if that’s the case, you’ve probably lived through two recessions and dealing with crippling student loan debt already.

How did we get here?

U.S. GDP dropped by 1.4% in 2022’s first quarter. And as you might imagine the Ukraine crisis and a rocky stock market haven’t helped.

Depending on who you ask, culprits include COVID stimulus check spending, post-COVID global supply chain disruptions, the Great Resignation, and whomever a politician on any day on any news channel happens to name in the legislative blame game.

Who’s suffering the most?

An April Wells Fargo study indicates that people between ages 25 and 44 experienced the highest inflation rates, at nearly 7%. The very demographics that require those big-ticket items the most. The youngest of which is making the least amount of money.

For those of us carrying student loan debt, despite government promises to cancel it, higher interest rates will affect federal college loans as we wait for that promise to become a reality.

How long can this go on?

Some experts say it may get better as soon as the end of this year. Others say it may last until 2025. The good news is that most of them see positive signs that at least the supply chain challenges may ease soon.

Deloitte recently offered four possible scenarios in an article positing inflation’s future. They predict the following:  1. we return to normal based on economic history  2. we accept a rate of up to 4% and adjust to the new normal  3. Rates rise to between 8 and 9%, which sets off a spiral that discourages future spending or 4. supply chains improve rapidly while demand drops, driving rates down to 1% or lower.

How likely is a recession?

Technically, a recession happens when GDP falls for two consecutive quarters. Economists are saying recession risk is rising to about 50%, although their predictions vary as to how bad it may be. And no one has declared us in an actual recession yet.

The economy is as hard to determine as a pair of grandmothers’ contentious debate over whether to wake a sleeping baby or let them lie.

The Congressional Budget Office is more optimistic. They predict that GDP may grow by 3.1% and that inflation has topped out and will only go down from here.

Given the ongoing debate, it’s best to prepare for the worst and hope for the best.

What Can I Do to Prepare?

The most important thing you can do is to create a budget and learn how to stick to it if you haven’t already. And make sure your budget reflects your actual spending.

Before you make any purchase, carefully consider whether what you plan to buy is a need or a want. If you’re used to buying on a whim, inflation is a great opportunity to acquire a long-term financial mindset by delaying your purchase if you can.

And refrain from listening to the tempting calls of the credit cards in your wallet. Remember, the fed raised interest rates. And, given we are living in uncertain times, you probably shouldn’t rack up credit card debt if you can help it. However, if you’re already carrying credit card debt, consider a balance transfer to a credit card with a 0% APR. They’re out there.

And if you have things in the needs column, buy big. If the baby formula crisis of 2022 has taught us anything it’s that buying in bulk is a smart move.

Yeah. It’s a stressful time. But remember, your grandparents got through miles-long gas lines in the 70s, your parents survived the Great Recession of 2009. And you’ll get through this. After all, two world wars built the Greatest Generation.

Also keep in mind that economies fluctuate. This too shall pass.

In the meantime, make time for Me Time. Go to the batting cage or the gym. Zen out with meditation and yoga. Insurance data shows that stressed-out people suffer health issues they can’t pay for and leave the planet sooner than they statistically should.

Another way to prepare for the worst is to have a solid life insurance policy with a locked-in rate. Get term life insurance policy quotes today.

Understanding
No Exam
Life Insurance

Understanding No Exam Life Insurance

Getting an online term life insurance policy quote is the easy part. Actually receiving the policy can take longer and is a bit more complicated. The culprit? Medical underwriting.

However, if you’re interested in obtaining a term life insurance policy with coverage for between 10 and 30 years, it is possible to skip the medical underwriting process with no-exam term life insurance.

What Is Medical Underwriting?

It’s a process that helps insurance companies determine your health risk so they know how much to charge you. The bigger the risk you pose, the more your insurance company wagers they will have to pay your death benefit during your coverage period. To cover their risk, they charge a higher premium.

But it’s a good option for younger people who want term life insurance but are concerned about disqualifying due to a chronic health condition. It’s also good for those who don’t mind paying a higher premium to avoid the insurance health exam. You only have to fill out an online health questionnaire.

The time-saving factor is understandable, as medical underwriting involves a battery of medical tests, blood, urine, blood pressure, and so on.

Nearly all life insurance companies have a questionnaire. But they typically only ask about your gender, age, lifestyle habits, and any risky hobbies you indulge in.

Easy peasy.

The best part is, you walk away with all the benefits of a term life policy at a locked-in rate and a guaranteed payout of up to $2,500,000 should your family lose you unexpectedly.

It pays to shop around. You just might find the best life insurance company at the lowest rate despite a health condition. Because as underwriting algorithms improve, fewer insurance companies are requiring medical exams.

Also, the list of disqualifying conditions is smaller than you think. These circumstances include, but aren’t limited to:

• Cancer
• Organ transplant
• Kidney disease
• HIV positive or AIDS
• Heart or artery disease
• Lung disease
• Hepatitis B or C
• Gastric bypass
• Crohn’s Disease
• Multiple Sclerosis
• Bipolar Disorder
• Drug or Alcohol abuse
• Epilepsy

Unless you fall into a disqualifying category, don’t let a trip to the doctor prevent you from getting life insurance. It’s too important. Your family depends on you.

Interested in the cheapest no medical exam life insurance? Compare life insurance companies today..

How to Select a
Life Insurance Beneficiary

How to Select a Life Insurance Beneficiary

One potato, two potato, three potato, four…remember that game? Whoever you landed on was It.

Picking a life insurance beneficiary isn’t like that.

Your beneficiary will be the one receiving and managing the money from your life insurance death benefit after you pass away. How do you want that money used? Who will need it most? It’s important you choose the right person and reevaluate that choice as your circumstances change.

Who Can Be a Beneficiary?

Pretty much anyone. It can be:

• your spouse or domestic partner
• your children
• your parent(s) or another family member
• a charity
• a friend
• a business partner
• A trust

Just know this. If you don’t choose a beneficiary, one will be chosen for you.

Why You Need a Beneficiary

Your death benefit—the one you’ve paid premiums into—must go to someone. A death benefit with no beneficiary goes straight to your estate. Which sounds okay. Except that going through your estate will keep the money tied up in probate court for six months to a year.

If after you die your family needs immediate financial support to make up for your lost salary, pay the mortgage, clear debts, pay taxes, and pay your funeral expenses, well, they’ll just have to wait. Also, your estate pays the legal fees, leaving your loved ones with less than you intended.

Tips for Choosing the Right Beneficiary

Who will benefit from the money the most? 

Be specific. Is it your minor children? Then your spouse probably makes the best choice as minor children can’t inherit assets directly. If you haven’t specified precisely by whom and how your death benefit will be managed, the court will assign a guardian to make those decisions on behalf of your children, not you.

Do you want to leave your benefit to more than one person?

If you would like your benefit distributed among a few people, make sure you identify them by name (“children”, for example, is too vague). And stipulate the percentage of your death benefit each will receive. Percentages are a better measure than dollar figures as your death benefit amount may fluctuate, depending on your policy.

Keep your beneficiaries up to date with each major life change.

Life changes include marriage and divorce, each of your children’s births, when your adult children leave the house, and if you become responsible for your aging parent(s). Keeping your policy up to date will avoid misunderstandings, like having your death benefit go to your ex-spouse because you forgot to update your life insurance policy.

Keep your life insurance policy aligned with your will.

When there’s confusion about who gets what, the insurance policy, being a legal contract, will supersede the will. (See above paragraph regarding an ex-spouse).

What If My Beneficiary Dies Before I Do?

This is where your second, or contingent beneficiary, comes in. And choosing a contingent beneficiary is every bit as important as choosing your primary beneficiary.

This is especially true if you have children and your spouse predeceases you. If you want the money to go directly to your children but they are too young to manage it, set up a trust and make the trust your contingent beneficiary. The trust, managed by the legal guardian you’ve chosen to raise your children, will manage the trust to make sure your children’s needs are cared for and relinquish whatever money remains in the trust once they reach early adulthood.

A quick caveat: If one of your chosen beneficiaries receives financial assistance for a special need or disability, be aware that if you leave them more than $2,000, it may cause them to lose that subsidy. Make sure you take this into account.

Many insurance companies allow you to choose more than one person or organization as your contingent beneficiary.

For example, if you are married without any children and your primary beneficiary, say your spouse,  dies before you do, you can divide your death benefit between your aging parent and your favorite charity.

Are there Certain Requirements or Restrictions?

It depends on the state you live in.

Some states have community property laws, which mandate that all property obtained during a marriage is equally owned by each partner in that marriage.

This means that, if you do not want your spouse to inherit your entire death benefit, he or she must sign a waiver that relinquishes their right to half of your shared assets.

States that have community property laws include:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington

It also depends on the insurance company, for a different reason.

If an insurance company suspects that a beneficiary has coerced the benefactor into assigning them as a beneficiary, the insurance company will refuse to issue the death benefit. Which then makes it part of your estate. So, if you end up sad and lonely in your old age, don’t get too chummy with your at-home healthcare worker. Your children—and your insurer—will not remember you fondly.

Got a beneficiary or two in mind? Get a term life quote today..