With all of the sudden and unexpected deaths in recent news, I thought it would be good to share this excerpt from my book regarding life insurance. People typically don’t like dealing with this subject, especially since it involves death, but it’s important to be prepared. I wouldn’t be me if I didn’t include the Word of God on this issue. The Bible teaches that we are to leave an inheritance to our children (Prov. 13:22). I pray the following information is helpful to you.
~Kim
The Importance of Life Insurance…
Are you prepared for the unexpected? The other reason why we need to stop spending so much in the mall is because we need to be certain that we’re prepared for life’s challenges. Life insurance is a must, yet many women fail to realize the importance of obtaining it. Do not be unprotected from the unexpected. If you’re a single mother, do you know what would happen to your children if something happened to you? Who would take care of them? Will there be money available to raise them? If you were to suddenly die, will there be enough money to bury you? Oftentimes, we don’t think about this until we’re forced to. Life insurance can help financially protect your loved ones in the event of your death. It’s important if you’re married and even more important if you have children. The American Council of Life Insurance offers brochures and other information that can assist you. The website is www.acli.com or you can call (202) 624-2000. Many of us have insurance through our jobs, but that is often not enough. This may be adequate if it’s just you, but if you’re married or have children please consider adding an additional policy to ensure that your loved ones are well taken care of.
Cash Value insurance policies provide a basic death benefit, but they also have a savings feature that you can withdraw from or borrow against. Universal Life, Whole Life, and Variable Life are each different types of cash value insurance. When you pay the premium in a cash value policy, some of the money goes toward the death benefit, and some goes into a cash value or savings account. This results in a much higher premium than you’d pay for term. Consider if you’ll be able to comfortably pay the premium, and if you’ll be able to afford it on an ongoing basis. You should also find out how much you’ll get if you decide to cash it in.
There are advantages and disadvantages associated with each type of insurance. It really depends on your specific circumstances. If you intend to keep the policy for 10 years or less, you may want to go with term, however, if you plan to keep the policy for a longer period, you should consider a cash value plan. It’s best to talk with an insurance agent who can recommend a policy that will fit your personal goals.
The following is a brief explanation of different types of life insurance:
Term life insurance pays a fixed amount of money to your benefactor if you die during the term of the policy. The costs of premiums increase as you get older.
Whole life insurance is permanent insurance that provides a death benefit that is guaranteed for the insured’s life as long as premiums are paid. Participating policies may pay dividends that can increase the policy’s cash value, but they are not guaranteed.
Universal life insurance is considered a variation of whole life insurance with more flexibility. Within limits, the policy owner determines the amount and frequency of his or her premium payments and is permitted to adjust the policy face amount up or down to reflect changes in his or her needs. As premiums are paid and cash values accumulate, interest is credited to the policy’s accumulation fund.
Variable life insurance is similar to universal life in that there is flexibility in connection with premium payments and death benefits. Although with variable life, premium payments are held in separate accounts, and the policy owner chooses how the cash value will be invested. Accordingly, such a policy’s cash value will rise and fall with the performance of the chosen investment portfolios.
Many insurance companies offer buyer’s guides. Ask questions about anything you’re unsure of. Get a step-by-step explanation from the agent before signing any papers. Check the company’s reputation and financial strength. This information is available at public and business libraries. Make sure the agent and the insurance company he or she represents is licensed in your state. When you purchase a policy, make your check payable to the insurance company, not the agent, and get a receipt. Bear in mind that some companies may require you to take a physical exam. It is important to be truthful when completing the forms. Lying on your application could result in a denial of the death benefits or payment for your survivors.
A friend of mine died unexpectedly due to a brain aneurysm. She was married, however she and her husband separated and had been estranged for more than ten years. They never officially divorced and when the life insurance papers were filed, the husband, who hadn’t spoken to her or the kids in years, ended up getting all of the money. Needless to say her children were quite upset. Fortunately they were adults, but my friend clearly would not have wanted this kind of outcome. We must take care of our business matters in order to avoid these kinds of scenarios. Imagine if she had become a millionaire? We’re quick to claim we’re ready for lots of money, but without a solid plan in place we’ll lose it as fast as we get it.
You Need A Will…
Do you have a will? If my friend had prepared one her family may have been in a position to get at least half of the insurance benefits. Wills are simple to create, but half of all Americans die without one. When you don’t have a will indicating your wishes the court steps in and distributes your property according to the laws of your state. Wills are not just for the rich. The amount of property you have or don’t have doesn’t matter. A will ensures that your assets will be given to family members or other beneficiaries you designate. If you have no apparent heirs and die without a will, it’s possible the state may claim your personal property. A will is not just writing your wishes down on a piece of paper and tucking it away someplace. It is a legal document and although there are many books and computer software available that will allow you to do it yourself, it’s always best to seek a professional to ensure everything is done properly.
Having a will is especially important if you have young children because it gives you the opportunity to designate a guardian for them in the event of your death. Without a will, the court will appoint a guardian for your children.
Here are the basic elements generally included in a will:
˚ A brief description of your assets
˚ Names of spouse, children, and other beneficiaries such as the church,
charities or friends
˚ Alternate beneficiaries (in the event a beneficiary dies before you do)
˚ Specific gifts, such as a car or home
˚ Establishment of trusts, if desired
˚ Name of an executor to manage the estate
˚ Name of a guardian for minor children
˚ Name of an alternative guardian (in the event your first choice is unable
or unwilling to act)
˚ Your signature
˚ Witnesses signatures
You’ll probably need to update your will several times during the course of your life. For example, a change in marital status, the birth of a child or a move to a new state should prompt a review of your will. You can update your will by revising it. This is done by adding on or by drawing up a new one. Generally, people choose to issue a new will that supersede the old document· Be sure to sign the new will and have it witnessed, then destroy the old one.
Once your will is written, store it in a safe place that is accessible to others after your death. If you name a trust company as executor, it will hold your will in safekeeping. You can keep it in your safe deposit box, but be aware that some states will seal your safe deposit box upon your death, so this may not always be the best place to store your will. Make sure a close friend or relative knows where to find your will. If you had an attorney prepare your will, have him or her keep a copy with a note stating where the original can be found.
When my father passed away about eighteen years ago, he didn’t have any of his personal information readily available. As the executor of his estate, I had to pick through and search for these documents. Dealing with his death was already difficult. My inability to easily locate this information added more stress. This may seem to be a tedious task but think of your loved ones and the time and frustration you’ll save them. This also ensures that your final wishes are carried out. If you’re unsure about your legal rights, a good place to go for guidance is
www.freeadvice.com. This is the leading law and legal advice website for consumers and small business, however, this is only general information. Consult an attorney before making any final legal decisions. This site also offers translation for those who speak Spanish.
~By Kimberly Holmes
Tags: Death, Life Insurance, Millionaire, Will
