Financially Protect the Ones You Love

When a loved one passes away – likely the last thing on your mind is finances. However, that doesn’t mean families shouldn’t do what they can now to plan for the future and protect those they love most. All types of insurance are intended to protect you from unlikely outcomes that would have an outsized financial impact if they occurred such as auto insurance for a car accident.

Specifically, a life insurance policy can help families protect their futures and ease financial burdens. Would your family be protected if tragedy strikes? When it comes down to it, buying life insurance isn’t meant for you – it’s meant to provide a future for those you love in the unlikely event of your passing. Think of the hardships your loved ones would face if you were gone and had no financial protection in place for them. For many people, it is challenging to think about coping with the loss of a loved one. Having life insurance as a safety net may make life easier for them after you’re gone.

September is Life Insurance Awareness Month, which makes it the perfect time to evaluate your current benefits with your family members. It can be a tough conversation to have but it’s worth having. Life insurance policies can be taken out by anyone who can prove they have an insurable interest in the person – meaning financial or emotional interest in the insured person’s life.

There are many types of life insurance. Term life insurance provides coverage for a specific period as long as you pay the premium, while whole life is coverage you have until you pass away. Term life insurance is focused solely on the "death benefit." Whole life insurance usually has higher monthly premiums and is more of a hybrid between a term life insurance policy and a traditional retirement investment. The benefits of having life insurance include funds to help cover funeral and burial expenses, income replacement for lost income, mortgage or rent payments, college or private school tuition and other bills or financial obligations.

According to a survey from the National Association of Insurance Commissioners (NAIC), when it comes to receiving life insurance benefits after a relative has died, most beneficiaries are unprepared. Every year, millions of dollars in life insurance benefits go unclaimed because beneficiaries are unaware of the coverage or don’t have basic information about the policies. If you already have life insurance, make sure the beneficiaries for your life insurance policy are up-to-date and that you notify the individuals you select to be your beneficiaries as it will make it easier for them to file the claim.

If you are the beneficiary of a life insurance policy – you must file a claim in order to receive funds. Also, ensure you have a copy of the death certificate before you file a claim. Lastly, you can likely choose to receive the benefit as a lump-sum payment or spread it out over several years as an annuity. Remember, if you ever get married, divorced or want to make a change – you will need to contact your insurer to update your beneficiaries and policy.

If you do not already have a life insurance policy in place, now is the time to prepare. Take time today to talk with your family and a licensed insurance agent to determine if life insurance is right for your family. You should note, the older you are, the more expensive life insurance will be to purchase because the risk of your death increases with age.

In Tennessee, there is a free look period of 10 days after purchase of a life insurance policy. This means you can return the policy with a full refund without fees or penalties within those 10 days. Furthermore, there is a grace period of 30 days for missed payments. If you miss a payment, you will be covered for 30 days even if the missed payment is not made up. Additionally, the insurance company of your life insurance policy can deny payment within two years of purchase if there was material misrepresentation on the application or if the insured person died by suicide. Lastly, the insurance company has 60 days to pay a death claim to beneficiaries and if a claim is not paid within 15 days of the date of death, the company must also pay interest.

You should explore your options to make sure you’re making the right financial moves to meet your goals. If you are not sure if a deceased loved one had life insurance, please visit www.tn.gov/insurance  and click on the Lost Policy Service tool to see if you were the beneficiary for someone’s life insurance policy. If the insurance company your loved one had a policy through is denying a claim – contact us through our Consumer Insurance Services at 615-741-2218 to get help.

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