We all have some things we keep to ourselves and never tell. While you can’t help keeping secrets to your family, they should at least know about your life insurance policy, since the primary reason you’ve purchased it is to help ease the financial load you’re they’ll shoulder when you die.
So, if your family doesn’t know that policy is there, things may not go so easily and they can’t make the most out of what you’ve left for them. That’s why it’s important to let your family or beneficiaries in on some of the details of your life insurance policy.
1. Who Your Beneficiaries Are
A person can’t look into something if they didn’t know it even existed. So, instead of waiting for the insurance company to track down your beneficiaries which could take a whole lot longer, let your family or beneficiaries know a life insurance policy exists so they can immediately act on lodging a claim. Letting your family know who your nominated beneficiaries are may help prepare them for where the money will go if ever the inevitable happens.
2. Your Insurance Policy Account
Letting your loved ones in some details of your insurance policy account makes it easier for them to pursue a claim in your demise. A good idea is to keep your policy documents in a safe place with a copy of your will and to have a document that clearly identifies all your investments. Ensure that these documents include details such as the provider’s name, policy number or unique identifier, and the date the policy or investment commenced and when it will expire.
3. Where You Store The Details
Aside from letting your family know about the existence of any life insurance policy, you should also let them know where you keep the policy documents. The Australian Government recommends storing both a hard copy and an electronic copy of your policy details. Have the hard copy ideally kept under lock and key, and store the electronic copy in a secure data file.
4. Your Policy’s Exclusion
It may be worthwhile to let your family know about your life insurance policy’s terms and exclusion so they’re more aware of their rights to make a claim. Most life insurance policies don’t cover death as the result of suicide or a self-inflicted injury, and some lifestyle or health conditions may also be excluded. Such exclusions should be discussed before you buy your policy so you’re fully aware of its conditions.
5. Whether You Have An Advanced Funeral Benefit
Processing a life insurance claim may take some time, but many policies can provide an advanced amount of your total payout to help cover funeral costs and other expenses. The immediate aftermath of a death can be traumatic and chaotic, so it helps to let your family know they may be eligible for immediate financial assistance in those first days and weeks.
6. Your Debts And Liabilities
It’s a good idea to keep your family informed or much better involved in all your financial affairs. This way, if something were to happen to you, they’d have a clear idea of your assets and liabilities. With this knowledge, they’d know what to pay off first once they received your death benefit, which could include a mortgage, car loan, outstanding credit card debts, investment property, or anything else that may burn a hole in your family’s savings.
7. How You’d Like To Spend The Money
Let your family know how you’d like them to spend your life insurance money. Aside from paying off your debts, you can also throw in some fun requests, such as a family holiday or a trip to your favourite place. You may also like a portion of the money to go towards a certain charity. Get as creative as you like and let your family honour your life by fulfilling your live cover payout wishes.