After you have life insurance, you want to forget about it.
I’ve talked about this before. Thinking about life insurance means thinking about some deep stuff, things you don’t want to really think about. Like what happens to your family if something dire happens to you. So naturally, after you buy life insurance, people tend to want to go all Jason Bourne and get some amnesia. You want to buy life insurance, move on and never think about it again.
But that isn’t a great idea. Or rather, if you want to do basically do that, if I may, let me suggest that you still have one or two important things to do first. Namely, you need to decide where to put your life insurance information, and who to tell about it.
For obvious reasons. If something would happen to you, the last thing you want is for your loved ones to have no idea you have a life insurance policy, and for them to live in abject poverty with this awesome policy just hanging around, waiting to be used.
It also wouldn’t be helpful if your family members are saying, “I know that there’s a life insurance policy, but I have no idea who it was and where the policy is.”
I’d like to think that, in that case, they’d eventually figure things out, but these days, you never know. It’s easy to imagine someone losing their paperwork and having a digital life insurance policy filed away on some device, a device that has a password, completely unknown to the deceased’s family members.
And if you’re married and thinking, “Well, this is going to be a short post, Liran, because I’ll tell my spouse, and problem solved — now, why don’t you show me one of those cute cat videos on YouTube,” let me remind you that you and your spouse could die at the same time. You could both be in a car wreck. Maybe you’ll both be on a ski lift when the cables snap. Or maybe you’ll both go to a dinner party, where the host will turn out to be demented, and poison everyone–
–Yep, this is turning into a fun read… and, hey, if you ever need me to clear out a party, my number is on this web site.
But, look, this is the sort of thing all responsible adults need to think about. Unpleasant as it is, there are 30,000 deaths from automobile accidents every year. Anyway, before we all swear off driving and skiing forever, here are some thoughts on where you should keep your insurance policy, and then, I promise, you can mostly forget about the fact that you have life insurance.
Your plan if you are superduper organized. I spoke to Dr. Albert Williams, a personal finance professor at H.Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University. Williams really knows his personal finance, and he says that when you get your life insurance policy, if possible, “the original documents should be kept at a safe place in your house, preferably in a fire proof vault.”
He also suggests that you also give a copy of the life insurance policy to your lawyer. Or you can put it in your bank’s safety deposit box. Or you could let copies remain in the safe deposit box and your attorney.
But even that isn’t enough. If you really want to take precautions, make copies of your life insurance policies for your beneficiaries or their guardians, Williams says.
(If the guardians are you and your spouse, you’d do well to give a copy to your sibling or your parents or maybe your in-laws; give them to a couple people in your family who you trust obviously.)
Williams also recommends scanning the document and keeping it somewhere electronically.
And finally, he suggests telling your beneficiaries if your attorney or a financial adviser has a copy as well. “For cross checking,” he says.
In other words, you want to cover every base you can think of, so you basically make it impossible for your loved ones to not locate your life insurance policy, in the event that they would need it.
If you aren’t super organized. Not everyone has a lawyer or even a bank safety deposit box. Or even a home safe. For what it’s worth, you can find some home safes for as low as thirty bucks, although most of them do seem to be a hundred to two hundred or more. But the bottom line is that you’ll want to keep your life insurance policy somewhere in your house, where you feel that it’ll be safe from your dog chewing it up or your kids dunking it in the aquarium. (And, of course, if something happens to the original documents, you can get a new copy from your insurer. It isn’t as if you’ll lose your policy coverage because you lost your paper copy. But, still, I’m trying to save you the hassle of replacing it.)
Another suggestion, one that came out of my recent conversation with Ray Caucci, senior vice president of product management, underwriting and advanced sales at Penn Mutual Life Insurance: “You at least want to make sure the person who is going to be around to manage your affairs knows where your policy numbers are, the contact information for your insurance company, or agent or estate planning attorney. Whoever you’ve entrusted to take care of your affairs, they should have that contact information.”
Now, if you’re, say, 35 years old, you probably haven’t exactly talked to anyone about handling your affairs. You plan on sticking around for a long time, after all. But, still, Caucci says that even if you’re young, you probably have someone in mind in case something would happen. Maybe a brother or sister? Give a copy of your policy to one or both of them, or if you’re an only child, a young cousin that you like. Or your best friend.
“As you get older, of course, those individuals who manage your affairs might change,” Caucci says.
So if you aren’t organized enough to put your policy everywhere, and basically make it lost-proof, at least come close to doing that — and find a safe place in your home, like a safe, and let your family know that you keep the important papers there, and share a copy of the policy with a relative or two. If you do that, you should be in good shape.
If you’re a completely disorganized person. At the bare minimum, keep your policy where you keep any other important papers, even if it’s an old shoebox. Maybe your family will get lucky, and someone will find the policy and a treasure trove of other papers if the worst would happen.
And then — and this is important, especially if you’re a complete utter loss when it comes to organization — start mentioning to close friends and family that you just bought a life insurance policy and tell them the name of the company.
Tell them everything you can think of pertaining to your life insurance policy.
And the upside is that while you’re telling them, you can be proud that you bought life insurance, and that your family is protected, and feel great about that, and then, like everyone does, you can kind of forget about all of this unpleasant talk of an early demise.
But the reason for all of this over-sharing? If someday, you’re poisoned while on a ski lift, odds are good that when everyone starts whispering and wondering at the funeral if your family was protected, someone will surely speak up and say: “Hey, you know, I remember this weird conversation that we had 17 years ago…”
Perhaps you’re interested in the cost of final expense insurance; if so, we can help. Call us today!