Why You Need Life Insurance And Dealing With Life Insurance

Life insurance can seem complicated. You need to find the right company, the right amount of coverage, and a trustworthy brokerage. Yet life insurance is the best way to ensure your family’s financial wellbeing after you pass away.

In this article, we discuss why you should consider insurance and explain how the claims process works.

Reasons to get life insurance

Pay off your debts

If you’ve taken out a mortgage, car loan, or any other type of loan, you have to complete a credit check. The bank wouldn’t lend you money unless they thought you could pay it back. But what happens when you pass away? Will your spouse be able to meet the loan repayments? Or will the bank repossess your home? A life insurance payout can help your family keep a roof over their head even after you’re gone.

Cover daily expenses

All families have a budget. You probably already know how much money your family needs to get by each month. If they don’t have your income anymore, will they be able to pay the bills and put food on the table? And what about all the unpaid work you do around the house, like cooking, cleaning, gardening? Will your spouse be able to cover these, or will they need to hire help? Will they be able to afford help? A life insurance policy can help to ease these burdens. Your family can spend the insurance payout on whatever helps them the most.

Secure your family’s future

If you have children, you’ve probably thought about their future more than once. You may have started a college fund. Or perhaps you’re planning to help them pay for their wedding or put a deposit down on their first home. Your death won’t just impact your family in the moment, but can also put a huge financial dent in their future. A life insurance payout is a lump sum that they can use to cover these larger costs.

Cover funeral expenses

Funerals are expensive. If you pass away, will your family be able to afford your funeral? Will they need to take out a loan or beg family members to help out? An insurance payout can ease their financial stress so that they can grieve in peace.

Leave an inheritance

Most of us want to leave our children an inheritance, so they have a leg up in life. If you pass away early, your savings will likely fall short of your financial goals. Your spouse may even need to dip into your savings to pay the bills after you’re gone. An insurance payout ensures your children have a tidy sum to draw on after your death.

How do you know if someone had a life insurance policy

Most people don’t know the details of their insurance policy off hand. There’s usually a policy document buried in a drawer or filed away, or perhaps an email trail with a policy number. So if your loved one dies, you may not remember if they had a policy, which company it was with, or where the documents are.

You could find what you need in the deceased’s papers, but these days, many insurance policies are bought online, so you should also check their email accounts. Bank statements will show the regular insurance premiums that were paid and what company they were paid to. If you can’t find banking details, or you don’t know the deceased’s email password, you’ll need to contact the bank or email provider and request access.

If you have a family accountant, financial planner, or lawyer, they may also be able to give you the insurance policy details.

Contact the insurance company

Once you have the policy number, you’ll need to contact the insurer. If the policy was bought through a life insurance advisor, it’s best to contact them first. They have experience with a range of insurance companies and can support you through the claims process.

You can also contact the insurance company directly and ask them about their processes. Make sure you find out how long the claim will take and what paperwork is required. What documents will they need, and do they have to be originals or certified copies? Can you download the forms online, or will you receive them via post?

Obtain a death certificate

As the next of kin, you’ll receive a death certificate. If you don’t, you’ll need to contact your local government agency to have one issued, and they may charge you a fee.

The insurance company will need to see the death certificate, and so will the deceased’s bank. If you need to transfer the house or car over to your name or access the deceased’s emails, you may need to provide proof of death too. Rather than obtaining multiple death certificates, which can get expensive, ask if these companies are willing to accept certified copies.

Submit your claim

Each insurer has a slightly different process when it comes to filing a claim, but they’ll generally ask you for the policy number and name of the deceased. This will also help verify what the life insurance policy covers. The insurer will also need to see the death certificate and may ask about the cause and place of death.

You’ll also be asked about your relationship to the deceased, whether they have a living spouse, and if there is a standing will. You’ll need to provide your ID and proof of your relationship to the deceased.

The bottom line

Life insurance doesn’t have to be complicated, and it can save your family a lot stress during their time of grief.

About the Author Gregory Rozdeba is co-founder

Gregory Rozdeba is co-founder and President of Dundas Life, a digital life insurance brokerage combining technology and personalized service to simplify the life insurance buying process.