KDI
TOPEKA–Life insurance protection is one of the most considerate acts that a person can do for his family, according to Ken Selzer, CPA, Kansas Commissioner of Insurance. Over the course of a lifetime, it can have great significance.
“Knowing what a life policy can do for your loved ones, and how to protect it for their future use, can be two important factors in your financial planning,” Commissioner Selzer said. “Talking over your life insurance needs with qualified insurance professionals is a good first step toward assuring your assets are used by your family.”
Commissioner Selzer emphasizes these life policy considerations.
• What kind of life insurance do you need? Term and whole life insurance are the two most common types of plans. However, there are many variations of each type, and there are a number of special-purpose policies that combine the basic policies with other elements. Talk to your insurance agent about what type works for you.
• Who is your beneficiary going to be? If you die without naming a beneficiary or beneficiaries of your policy, the benefits would be paid into your estate and then paid out according to your will or through state laws. This delays payment and could create a financial hardship for your heirs.
• How much coverage do you need? You and your agent should do a careful evaluation of your coverage needs, but a general rule of thumb is to buy life insurance that is equal to 5-7 times your annual take-home pay.
• Will I have any tax consequences? Your beneficiary(ies) will receive your insurance benefits tax free. With named beneficiary(ies), life insurance benefits do not have to go through probate or other legal delays involved in the settlement of an estate.
• Where should I keep my policy? Keep your policy in a safe place. However, do not use any place where the policy might not be readily available. Record the basic information — such as company, policy type, policy number, insured’s and beneficiaries’ names — in a separate place. Let your beneficiary(ies) know the kind of insurance policy you have, any changes you make, and where you keep the policy.
• What happens if I lose my policy? Loss of a life insurance policy will not affect your protection in any way. If a policy is lost, accidentally destroyed or stolen, ask your agent or write the company directly to obtain a duplicate.
• Do life insurance proceeds affect my family’s Social Security benefits? According to law, monthly life insurance payments will not disqualify the beneficiary from receiving full Social Security payments. Monthly life insurance benefits do not count as earned income, regardless of how much is paid each month through a policy.
• What happens when my family needs to file a claim? Family members, preferably with policy in hand, will need to notify the life insurance company in the event of a death of an insured person. Your local insurance agent should be able to discuss the steps needed to make sure the policy is paid out as quickly as possible.
• Filing a life claim. Your beneficiary will need to notify the life insurance company of your death. Again, that’s why it is important for your beneficiary to be able to locate your policy. Companies require a certified death certificate or other legal proof of death, and they may ask for the policy. The life insurance company will pay the proceeds of the policy to your beneficiary(ies) after receiving proper notification of death.
The Kansas Insurance Department now has a Life Insurance Locator Service in place for those who need assistance in locating life insurance and annuity benefits they may be owed. Those submitting a request will need to do the following:
• Complete a form you can download off our website, http://www.ksinsurance.org/healthlife/life/life-policy-search.php .
• Have the form notarized.
• Attach a copy of the certified death certificate of the policyholder.
• Send all information to the insurance department address listed on the form.
The National Association of Insurance Commissioners (NAIC) also has information on how life insurance can affect your different life stages. Go to http://www.naic.org/Releases/2016_docs/consumer_alert_life_insurance_roadmap.htm to read more.