In this post we help you: Reduce the risk of your loved ones losing benefits
It’s important to have a plan when it comes to an unexpected demise. Life insurance is a big part of that plan, but it’s often the little details that turn a good plan into a great plan.
If you’ve bought a term life insurance policy, you know that the term can last for as long as thirty years. Thirty years! Thirty years ago, there were no smartphones, the USSR was still a thing, and New Coke was revealed to the world. In short, a lot can change in thirty years.
That’s why it’s important to make sure that you don’t lose a copy of your policy. If there’s no proof that your life insurance policy exists, it will be very difficult for your beneficiaries to collect the benefit. (Check out our article on how to find lost life insurance policies to see what we mean.)
1. Tell your beneficiaries.
It will be a lot easier for your beneficiaries to collect benefits if they know the policy is in place. Give them a copy of your policy so they know who to contact if worse comes to worse.
If beneficiaries are too young to have a copy or you’d prefer to keep your policy private, appoint a single person to distribute copies after your death. In the case of your children, your spouse or the children’s godparents could fulfill this role. You could also give this job to your attorney.
If you bought your policy through an agent, make sure your beneficiaries have their name and contact information. They can help assist them in the event of a claim.
Whoever you choose, make sure you review this arrangement at least once per year. Make sure they still have any documents they need and that they’re still comfortable with the arrangement.
More about life insurance from PolicyGenius:
- 5 common mistakes when buying life insurance
- What kind of life insurance should I buy?
- Do you think of insurance as an investment? Here’s why that’s a bad idea
2. Keep a copy in a safe place.
Get a fireproof safe and stick all of your important documents in there. Fireproof safes are rated based on what temperature it gets inside the safe during a fire. If you’re just protecting paper documents, the inside of the safe can get as hot as 350°F. If you want to keep CDs or DVDs in there, the safe can’t get any hotter than 125°F on the inside. The lower the internal temperature of a safe, the more expensive it will be.
Most fireproof safes are rated for 30 minutes of protection. This is usually enough - fires move fast and generally don’t stay in a single room for more than 20 minutes. You can find safes rated for one or more hours of protection, but this drastically increases the cost. You should be able to get a good safe that protects your documents for between $150-300.
Remember to keep the safe updated with all of your important files. Give the code to your attorney or to a trusted family member or friend.
You can also keep your life insurance policy in a safety deposit box at a bank, but be aware that this could cause problems when you die. If you are the sole renter of the deposit box, only the executor of your estate will be able to access the deposit box. States have different laws about how soon after your death executors can access your deposit box. If you are a co-renter, either with a spouse or a child, your co-renter will be able to access the box immediately after your death.
3. Keep a digital backup.
There are a lot of different ways to keep digital backups of files. Keeping a copy of your policy on your computer is one way, but it doesn’t protect it in case your computer stops working or is lost or stolen.
You can (and should!) have a physical backup of all of your files, but you should also look into cloud backup services like Backblaze. Backblaze is available for $5/month for each computer you want to back up and has unlimited storage.
You could also look into free services like Evernote. Read our tips on how to turn Evernote into a digital filing cabinet. Other cloud drive services, like Dropbox, Google Drive, and OneDrive, might also be a good solution. All of these services also offer premium tiers if you need more storage.
Remember that your survivors will need passwords to access these services. There are multiple online services that can help you get your passwords to trusted individuals, but because online services have shorter lifespans than people, you’ll want to make sure you keep up to date with the latest. Check out this list updated by the Digital Beyond for the latest services.
Don’t have a life insurance policy yet? Let us help you out. If you have questions about it, you can check out our awesome life insurance guide. Or you can jump right in and get a free life insurance quote today.
Photo: Simon Lui