Sandy Praeger, Kansas commissioner of insurance, is asking Kansans to consider some important points about life insurance coverage.
“Most of us know that life insurance is not about us, but about our families and loved ones,” Commissioner Praeger said. “Having a life insurance policy on yourself can be one of the handful of decisions that will have great significance for others over the course of a lifetime.”
According to LIMRA, a nationwide marketing and research association, less than half of middle market consumers ages 25 to 64 have individual life insurance coverage. But almost half of those people say they should have it.
“That’s why I urge you, especially during September, which is designated nationally as Life Insurance Awareness Month, to think about what a policy can do for your family, and how to protect it for them,” Commissioner Praeger said.
Answers to questions about life insurance are in the Kansas Insurance Department (KID) publication “Life Insurance and Annuity Basics,” which can be printed or ordered from the KID website, www.ksinsurance.org. Some of the more common considerations are listed below.
Your beneficiary will receive the insurance benefits tax free, and life insurance benefits do not have to go through probate or other legal delays involved in settlement of an estate. If you die without naming a beneficiary, the benefits will be paid into your estate and then paid out according to your will or through state laws. This delays the payment and could create a financial hardship for your beneficiary.
Keep your policy in a safe place. However, do not use any place where the policy might not be readily available. Record the basic information — such as company, policy type, policy number, insured’s and beneficiaries’ names — in a separate place. Let your beneficiary know the kind of insurance policy you have, any changes you make, and where you keep the policy.
A change in beneficiary may be made after the policy is taken out, unless you have named an irrevocable beneficiary. An irrevocable beneficiary arrangement can only be changed with the beneficiary’s consent. Your agent can arrange for a change in beneficiaries, or you can do it by writing directly to your life insurance company and asking for the appropriate form.
You can specify as many beneficiaries as you want to receive the benefits. You may also specify how the benefits are to be divided. It is a good idea to name a second (contingent) beneficiary to receive the money in case your primary beneficiary dies before you do or at the same time as you.
Your beneficiary will need to notify the life insurance company of your death. Again, that’s why it is important for your beneficiary to be able to locate your policy. Companies require a certified death certificate or other legal proof of death, and they may ask for the policy. The life insurance company will pay the proceeds of the policy to your beneficiary after receiving proper notification of death.
“Knowing your life insurance basics makes for peace of mind for you as well as your loved ones,” Commissioner Praeger said.