Tuesday, June 25, 2013

Insurance Advice: Life Policy Ownership - How to Save You Stress at Claim Time

Someone you love passing away is perhaps the greatest struggle and pain that a human being can endure in this life. Unfortunately, the pain of losing a loved one can't be abated, but in our experience dealing with life insurance claims for people who have passed on, there are things people can be unaware of regarding life insurance which can lead to a prolonged and stressful claim process, leaving families waiting and stressed out in their already difficult time. This article is designed to educate, to make sure that you and your loved ones make things easier on your life insurance beneficiaries when you pass on. This can be done through adjusting policy ownership details.

To make it clearer, let me give you two examples.

John Smith has a life insurance policy, in the amount of $250,000. He is listed on the policy as the sole policy owner. When he passes on, the claims process begins. Unfortunately, the life insurance company is forced to wait for the executors of John's estate to have the will probated through the courts to determine John's desired beneficiaries and pay out the $250,000 to them. This process could take upwards of 2-3 months. Even worse, if John has no will at the time of his death, an even more complicated process ensues that will drag on even longer and could even, in the worst case scenario, see his policy benefit people he did not intend for it to!

In the second scenario, John Smith has the same life insurance policy ($250,000). In this case though, John had determined that he wished his wafe Stacey to be his beneficiary in the event of his death. In this interest, he had his wife registered as an additional policy owner. When John passed away, the insurance company immediately knew the intended beneficiary and was able to pay out within days to his wife Stacey. This avoided the lengthy probation process entirely. All it took was the consent of both John and Stacey and their signatures. The ownership details, in terms of the insurance claim, supercedes anything put into the will, allowing a quick and easy transfer of the $250,000 to his wife, supporting his family in the most quick and easy manner possible in their hardest time.

If you have life insurance and you want to make things as easy as possible, think seriously about including your intended beneficiary as a policy owner. This will ensure that in the event of your death, months of wrangling and procedures are circumvented and the money gets into the intended hands from the insurer. We have heard some real horror stories in our time, of entire estates falling into the wrong hands or families forced to give up their lifestyle due to being forced to go too long without their insurance claim after the death of the family breadwinner. We hope that knowing this helps, and as always, if you have any questions about this process or would like to know more, we're available anytime.

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