While thinking about your own death is not always appealing but sadly it is a reality. Many of us purchase life insurance with the intent that in our unfortunate passing that our loved ones will have the financial security they need to continue living the same lifestyle. But in order for that to happen there are some mistakes that are imperative to avoid when setting up your life insurance policy.
Example Mistake 1: Not Naming A Beneficiary
This might sound silly but it’s important to name the exact person you want your insurance policy to go, otherwise, it will go to your “heirs at law” and might be subjugated to estate taxes.
Example Mistake 2: Naming Minor Children As The Beneficiary
In the event of your untimely death, a minor will not be given the money but rather to their guardian. If a guardian was not appointed then the state will appoint someone. This ends up delaying the release of funds.
Example Mistake 3: Not Updating The Beneficiary Designation
Any life-changing event such as a marriage or divorce, the designated beneficiary should be updated. You do not want your ex-spouse to receive your life insurance policy benefits.
Example Mistake 4: Not Being Specific
Leaving your life insurance policy to your children is not specific enough, you need to designate how much each child is entitled to get from your life insurance policy.
Planning for what happens after your death might seem morbid but it’s one of the necessary things in life. For more information, contact one of our estate planning attorneys.