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Buying life insurance is a great way to make sure loved ones are protected and provided for. It's not fun to think about what could happen to surviving family members after death, but taking the time to consider this issue and prepare for it could help the people who matter most to maintain their quality of life if a tragedy happens.
Anyone buying coverage should research insurers carefully and make sure the death benefit on the life insurance policy is large enough. And once coverage is in place, there's one more crucial step to take.
Do this after buying life insurance
After buying life insurance, the first thing to do in every case is to let the appropriate people know that a policy has been put into place.
In most cases, it is a good idea to tell the beneficiaries -- the people who will receive the money after a death occurs. These are the individuals who have the greatest interest in making sure a timely claim is submitted to the life insurer if a death occurs since they are the ones who will be waiting for the insurance payout to help them cover costs.
If for some reason a policyholder doesn't want to tell all the beneficiaries -- or if the beneficiaries cannot understand or won't be able to help ensure a claim is made -- then it is still essential to tell someone else. In this case, if the policyholder has chosen someone to act as the executor or administrator of their estate, this can be a good person to inform about the policy. The executor or the administrator of the estate will handle a variety of legal issues when a death has happened, including probating the will. This person can help ensure a timely life insurance claim is made.
By alerting the right person or people, a claim can be submitted right away so the death benefit can be received as quickly as possible and start being used as needed.
What if beneficiaries don't know there's a policy?
If the beneficiaries of a life insurance policy are unaware that coverage has been purchased, insurers are supposed to take action. Insurance companies are generally expected to check Social Security death records and provide notification when a covered person has passed away and no claim has been made.
It can take a lot of time, though, for an insurer to realize a policyholder died and no life insurance claim has been submitted to get the death benefit. However, this system is not perfect, and life insurance companies may not always know a death happened or be able to find the right people to notify that insurance was in place and a policy is waiting to pay out.
There's little sense in paying for insurance premiums only for the beneficiaries not to get the money for months or years, if they get it at all. So those buying coverage don't want to take any chance of that happening. Telling beneficiaries or some other responsible person ASAP after buying coverage helps ensure the policy isn't wasted and that it provides the desired protection ASAP after an untimely death.
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