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Tips for Choosing a Life Insurance Beneficiary

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As you probably already know, there are multiple steps to purchasing a life insurance policy. After obtaining quotes and selecting the policy and coverage that’s right for your family, you’ll be asked to answer some medical questions and possibly undergo a medical exam. During the application process, you’ll also be required to select a beneficiary for your new policy. While this is typically pretty straightforward, there are several potential financial, tax-related, and legal issues that could emerge if your beneficiaries aren’t named properly.

To avoid these potential complications, it’s important that you carefully consider who your beneficiary should be. If this is a decision you’re struggling with, the following advice should help clear up any questions.

But first, let’s start with the basics.

Beneficiary Basics

First, it’s important to know that there are two basic types of life insurance beneficiaries.

  1. Primary beneficiary: A primary beneficiary is the first person(s) to receive the death benefit should the insured die. If the primary beneficiary dies before the insured, the policy will automatically defer to the contingent beneficiary.
  2. Contingent beneficiary: Also known as the secondary beneficiary, the contingent beneficiary is eligible for the death benefit if the primary dies before the named insured.

To avoid any complications and ensure the death benefit payout process goes smoothly, it’s recommended that you select both a primary and contingent beneficiary when setting up your policy.

In addition to the two types of beneficiaries, there are two classes to consider as well.

  1. Revocable beneficiaries: With a revocable beneficiary, the policy owner has the right to modify the beneficiary designation without the preceding beneficiary’s consent.
  2. Irrevocable beneficiaries: Under this class, the policy owner cannot modify the beneficiary designation without written consent by the original beneficiary.

Due to the potential legal complications that could arise from opting for an irrevocable beneficiary, the most straightforward option is revocable.

Now that you have a better understanding of the types of beneficiaries, how do you choose? You can name any of the following:

  • People: This could be a family member, legal guardian, or even a business partner.
  • Estate: If you choose your estate as the beneficiary, the death benefit will go to the Executor of the estate. It’s important to note that your estate can only be named if you’ve drawn up a last will and testament. If this is the path you’re considering, take a moment to discuss any tax implications with your agent, financial advisor, or accountant.
    Trusts: If you have a trust already set up, naming your trust is an option.
  • Charity: Charities can be named as either the primary or contingent beneficiary.

Many policy owners have more than one beneficiary they would like named on their policy. There are two approaches you can take in this situation: per stirpes or per capita.

Per stirpes: Under this option, the death benefit would be divided equally among the named beneficiaries and/or their surviving children. For example: You designate your two daughters, Allison and Nicole, as beneficiaries of the policy. Allison dies before you, and you pass away next. Nicole would receive 50% of the proceeds and Allison’s surviving children would receive equal amounts of the remaining 50%.
Per capita: Under the per capita option, the death benefit would be equally divided amongst all the surviving beneficiaries in the lineage line. For example: Using the above scenario, assume Allison had three children and Nicole had none, when you passed away. The proceeds would be divided equally between Allison’s three children and Nicole. Each beneficiary would receive one-fourth of the insurance death benefit.

The Dos and Don’ts of Life Insurance Beneficiary Designation

The following are a few tips to keep in mind regarding your policy’s beneficiary.

  • DO consider who has the most to lose financially when naming your beneficiaries.
  • DO name both a primary and secondary beneficiary.
  • DO designate proceeds to be paid out in percentages rather than a fixed dollar amount.
  • DO make sure your will and designations aren’t conflicting.
  • DO notify anyone who has been named as a beneficiary.
  • DO consider the language of your policy to ensure your wishes are properly carried out.
  • DO review your policy every few years.
  • DO make necessary amendments to your policy when a major life event occurs. For example: marriage, divorce, birth, or death.
  • DO discuss any tax ramifications with an agent or advisor before listing your estate as the beneficiary.
  • DON’T make generalizations, such as “spouse” or “children.” Doing so could lead to complications during pay-out time and leave your grieving family to define your intentions. Be specific.
  • DON’T name a creditor as a policy beneficiary.
  • DON’T name minors unless a guardian has been designated for them.
  • DON’T complicate things. If you have a separate named insured, owner, and beneficiary, this could result in higher tax payout.

If you’re at the beneficiary consideration stage of the process, you’ve made a great deal of important financial decisions to ensure your family is protected. It would be a shame if your intentions weren’t carried out, simply because you overlooked an important detail. Or for your family to be embroiled in a legal or tax battle that could have been avoided. Discuss your options with an experienced agent before signing on the dotted line; and don’t forget to review your policy every few years.

The Growing Importance of Life Insurance for the Modern Woman

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Women have redefined their roles both in the workplace and at home. Whether working as a stay-at-home mom or outside the home as a top executive, our value has increased exponentially over the last decade. We’re running businesses, holding political positions, and homeschooling our children, all while making sure the household runs smoothly. In fact, a recent Bureau of Labor Statistics study reveal that over 40% of mothers in the U.S. are now the breadwinners of the family. Yet, despite our ever-growing responsibilities, 1 in 3 women are underinsured for life insurance. Only 52% have life insurance at all, while those that are insured have 31% less coverage than men.

It’s important for us to remember the financial responsibility we have to our families and really consider how they would be affected should something happen. Regardless of your career choice, marital status, or annual income, life insurance is critical to ensuring our family’s financial health, long-term.

Still not convinced? Let’s consider a few scenarios and how life insurance could benefit women, regardless of their personal situation.

Single Women

It’s easy to assume there’s no need for life insurance when you’re single with no children. Life is seemingly carefree and no one would be affected financially if something were to happen to you, right? Well, that’s not always the case. As we age, we face the difficulties of caring for family members who’re no longer able to care for themselves. Stop and consider what would happen to them in the event of your untimely death. Where would they go? Who would care for them? Where would the funds come from? Who will pay for your burial expenses?

Life insurance can also prove its value to single women who have incurred debt, particularly if you carry a loan with a co-signer. Typically, when you die, the executor of your estate is able to sell off your property to cover any outstanding loans, and the rest is forgiven. But if you have a co-signed loan, the entire debt transfers to the co-signer, often putting them in a difficult financial bind.

If neither of these scenarios describe your situation, you might be okay without life insurance. Keep in mind, however, that life insurance premiums are, on the average, cheaper for women, but also increase in price, as you get older.

Stay-at-Home Moms

If you’re a stay-at-home mom, you know how hard you work. Most consumers purchase life insurance to replace a family member’s income but, what about all the hours you put in, day in and day out? You’re critical to your family 24/7, providing love and support that’s almost impossible to put a price tag on. While it’s difficult to think about, it’s important to consider how your spouse would make it all work should the worst-case scenario occur. A life insurance policy could provide your partner the financial support and security needed to get through this difficult time. He or she could use those funds to take a leave of absence from work, hire a nanny, or pay for a cleaning service – whatever’s necessary to help the household get back to some semblance of normalcy.

Single Moms

Most single moms are the ones primarily responsible for their children. Life insurance offers the peace of mind of knowing your children are cared for financially, should you die prematurely. It can provide the funds needed for childcare, college, and all the others events that will occur on the path to adulthood.

Working Women

As our day-to-day expenses become increasingly higher, many families have come to depend on two incomes. How would your family be impacted should one of those salaries disappear suddenly? A life policy can help ensure your family has the financial support needed, as they adjust to this unexpected new life.

Business Owners

Women now represent more than 30% of small business owners. As an entrepreneur, you’re now responsible for the financial well-being of your staff, as well as your family. Investing in a life insurance policy is a great way to ensure payroll and other operating expenses are covered while your estate is being settled. Many business owners also use it as a tool for organizing buy-sell agreements and as benefits for valued employees.

What Can You Do Now?

If any of these situations sound familiar to you, you might want to consider a life insurance policy. Many find the process intimidating, unsure of what type of policy is the best fit or how much coverage is enough. While most quotes can be completed online nowadays, they don’t provide answers to those burning questions. Find an agent that you can trust to offer guidance and support throughout the process. The world isn’t going to crumble if you end up with the wrong policy or you forget to add that rider that would have offered additional coverage. But it’s best to be educated on your options, so you secure a policy with the best coverage, for the best price.

No one wants to fixate on the doom and gloom of life, which is why proper planning for the future is so important. It helps alleviate present day concerns by setting the ball in motion for financial security in the future. Equally, the ones left behind are able to rest a little easier during such a trying time. And, with so many more women becoming integral parts of a family’s financial structure, life insurance has become critical for both men and women. Is your family covered? Ask the right questions and start making a plan today.

6 Items to Consider About Life Insurance Over 50

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It’s a common misconception that life insurance is only necessary for young, married adults with small children. The reality is, life insurance policies can prove beneficial at any age. As our lifespan continues to grow, people are having children later in life, further increasing the need for a policy that can take you to retirement age and beyond.

Are you over 50 and considering a life insurance policy? If so, read on for some expert advice to consider as you navigate through the decision-making process.

1) Do I Really Need Life Insurance at This Age?

This is a question only you can answer. Take a moment to consider who might be affected by your death. Who relies on you financially and how far into the future will they require your assistance? If you’re currently working, how would the loss of your income affect your family if something were to happen? What assets would your spouse or children have access to and what kind of debt are you still working to pay off?

Would a death benefit be helpful in covering the following once you’re gone:

Funeral costs –The average funeral costs more than $7,000. Have you set aside a portion of your budget to cover these expenses? Losing a loved one is emotionally taxing; adding the financial stress of paying for a funeral makes the process that much more difficult.

Medical bills –If your death is a result of an illness, you could leave behind a mountain of medical bills. An insurance policy could help relieve that pressure. When comparing policies and rates, ask your agent about the acceleration of death benefit rider. This is offered as a rider on many policies today and could help alleviate the financial pressures of an illness before passing on.

Estate taxes –Life insurance policies can help cover the costs associated with settling your estate.

Funding an education or providing a legacy – Do you have a loved one you plan on helping through college? Many consumers invest in a life insurance policy to ensure their family’s plan for a higher education isn’t derailed early. Policies are also purchased to ensure a donation is made in their honor to their favorite cause or charity.

2) How Much Coverage Should I Purchase?

While there’s no way to determine exactly how much life insurance your family will need, there are a few formulas you can utilize to determine the face value of your policy. Prior to shopping for life insurance, it’s important to consider your current financial, as well as your long and short-term goals. If your primary goal is to cover funeral expenses, you’ll require a lot less protection than the individual with a grandchild’s education to pay for or a mortgage to pay off.

3) What Kind of Policy Is Best?

There are multiple types of policies available, each with their own set of pros and cons. First, you’ll need to consider the two main types of plans and how each would help in accomplishing your life insurance goals.

Term insurance – Term policies offer a guaranteed death benefit of a specified amount, valid until the end of the policy term or until you stop paying your premiums. There is no cash value associated with term policies.

Permanent insurance – This works as a sort of savings account. A portion of your paid premium goes towards the policy’s death benefit, while the rest adds cash value. There are a number of different permanent policies available, so it’s best to speak with an insurance professional or your financial adviser before making your selection.

4) What About the Medical Exam?

The underwriting process varies from policy to policy. Some policies require you to submit blood work and undergo a medical exam, while others simply require the answers to a few questions. Once you’ve determined the amount of coverage and type of policy you need, your agent should be able to provide a clearer picture as to what will be required of you.

5) How Do I Choose the Right Company?

No matter what age you decide to purchase a life insurance policy, it’s important you select a company that will be there for you long-term. When considering your options, research the ratings of each company. A.M. Best Rating Services and Moody’s both offer a financial analysis rating that can help in identifying which company is the most stable. If you use more than one rating source, pay close attention to their rating system, as they do vary from site to site.

In addition to their financial stability, conduct some research to understand the organization’s history. A company that’s been around since the 1800’s has a proven track record that far exceeds one established 20 years ago. Additionally, visit the National Association of Insurance Commissioners’ searchable database to view any complaints lodged against the insurance company. This can provide invaluable insight into how an enterprise does business and how they might treat you or your family in the future.

6) Where do I start?

While much of the information you need is available online, it’s a good idea to discuss your family’s unique situation with an agent before making any purchases. They can help ensure you purchase the right amount of life insurance, without going overboard, and that you get the most bang for your buck. Navigating through the process is generally quick and painless; the hard part is getting started.

5 Reasons to Convert Your Term Life Insurance Policy

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Despite their advantages, many consumers forgo permanent life insurance policies for term life, instead. Term policies are often viewed as an affordable option for satisfying an immediate need for coverage. Some financial advisors even recommend purchasing term policies and investing any additional monies in the stock market for higher overall gains.

Most term policies come with a Term Conversion Rider, which allows the policyholder to convert their term policy to a permanent policy, should their family’s needs change. If you’re in the market for a policy, be sure to discuss this option with your agent.

Already have a term policy in place? Read on to find out the top reasons why you might benefit from converting your term policy to a whole life product.

1) Your Family Could be Deeply Impacted Financially Following Your Loss

Anyone who’s faced the financial challenges that come with caring for a terminally ill or developmentally challenged family member understands its far-reaching effects. While it comes with a higher price tag, a whole life policy offers additional financial security through accumulated cash value. This can be borrowed upon at any time, adding another layer to peace of mind.

2) You’ll Likely Outlive Your Term Insurance

Term insurance has the advantage of being the most affordable option. But affordability comes with a price – you could pay years of premium, only to outlive the policy term. In fact, only about 2% of term life policies actually pay out. Once the term has expired, you lose all invested premiums, unless the policy is converted. While your family was protected in the event of your death throughout the term, you’ve made an investment that resulted in zero gains.

3) Restructuring of Your Estate

Unlike term policies, whole life insurance policies are a more effective strategy for estate-planning. Not only will they carry more security and value, they’re an effective way to ensure your family doesn’t suffer a devastating blow from incurred estate taxes.

4) Restructuring of Retirement Income

If retirement is no longer in your too distant future, you might want to consider converting your term life policy. The principal of a whole life policy is tax exempt, making it the ideal savings tool. These tax-sheltered policies can help ensure a consistent retirement income, so you can fully enjoy the fruits of your labor.

5) Financial Priorities Change

If you purchased your term policy 15 years ago, you were likely in a different position, both financially and health-wise. It was difficult to anticipate what might happen next week, much less 10 years down the road. If you feel a continuation of coverage might be necessary once the term expires, conversion could be your most affordable option. A new policy means another application and medical exam. Depending upon the outcome, this could result in higher premiums or, depending upon any health setbacks you’ve experienced, a declination in coverage. Fortunately, policy conversion allows you exemption from that medical exam.

Assuming your term policy has the necessary riders, you can convert some or all of your term life insurance policy anytime before the conversion expiration date. If you’re positive this is the avenue you wish to take, the earlier the better, as permanent policy premiums increase with age. It’s a good idea to review your life insurance policy with your insurance agent annually to ensure it still fits your family’s needs. After all, what’s the point in making such an investment if your family will still be left financially exposed?

Young, Single, and Childless? Why You Still Need Life Insurance

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So, you’re officially embarking on the next chapter of your life. You’re fresh out of college, just started a new job, and are on the hunt for your first home. Congratulations, you’ve officially entered adulthood. Your twenties are a special time and you should enjoy every moment to its fullest. But, that doesn’t mean you shouldn’t make some “adult decisions” during this period. And purchasing life insurance should be one of those decisions.

Traditionally, people don’t start thinking about life insurance until they get married or welcome a baby into the world. What could you possibly need life insurance for before that? Who would you be protecting before that? Well, there are still a number of great reasons to consider purchasing life insurance above and beyond what your employer offers. Let’s look at a few reasons why your twenties or early thirties is a smart time to purchase.

Younger = Lower Premiums

The insurance company’s revenue is determined by the amount of premiums collected, minus the death benefits paid out for that specific risk group. Another words, every year that the insureds don’t die, their revenue goes up. The life insurance underwriter’s job is to identify the likelihood of an early payout for each applicant and the premium is adjusted accordingly. The risk of them paying out when you’re young is significantly lower. As a rule, that decreased risk is transferred to you through lower premiums.

Good Health = Lower Premiums

The other primary factor in determining your premium is your health. While it’s possible for any one of us to die at any time, you’re statistically less likely to meet an early death if you’re young and healthy. As each birthday passes, the risk of you developing a health condition rises. Once you reach your 30s, the chance of you developing a chronic condition like heart disease or high cholesterol rises considerably. So, for most consumers, the ideal time to purchase life insurance is in your twenties. Your health, coupled with your age, equates to the best possible premium.

Insurability Later in Life

A permanent life policy is recommended over a term policy, as this is a great opportunity to build a little nest egg through the cash value on your policy. Depending upon your financial situation, however, this might not be an affordable option for you. If you decide a term policy is best for your budget, don’t fret; you’re setting yourself up for a later date.

Most term life insurance policies include a term conversion rider standard on every policy. This rider allows you to convert your term policy into a permanent life policy without submitting to another medical exam. While your converted policy premium will reflect your age and overall health, this rider comes in handy for people who have developed medical conditions since the original policy’s inception. It makes the entire process smoother and more affordable.

While this rider comes standard on most policies, some companies require the benefit to be requested on the application. Be sure to check with your agent to ensure you don’t miss out on this valuable opportunity.

Living Benefits

Most people equate life insurance to death. And rightfully so. That is it’s intended purpose, right? While this is true, many people use their life insurance for living benefits as well.

Your whole life policy has the added benefit of accumulating cash value. This builds slowly at first, as there are policy set-up fees that must be paid down at its initially. But as time goes on, you’ll start to see the cash value really grow. This is your money that can be borrowed against at any time, for any reason. Many insureds use this money to help pay off student loans, offset the costs of their wedding, or even supplement their income when they get to retirement age.

When purchasing your policy, be sure to speak with your life insurance agent about the Acceleration of Death Benefit Rider. Should you become terminally ill, this rider allows you to collect on your death benefit early. This can help ease the pain of paying for medical bills or provide you with the funds to check some things off your bucket list before your death. It’s a living benefit none of us envision ourselves ever needing, but are grateful for if and when the time comes.

Your twenties are a time to celebrate. You’re officially out on your own, enjoying the wonderful gifts that life has to offer. It’s also a time to start considering financial priorities and setting yourself up for long-term success. The best time to purchase life insurance is when you’re young and healthy. If you invest in your future now, it’s one less thing you have to think about later, when you’re celebrating the growth of your family or a new home purchase. So don’t delay; speak with an insurance professional about your options today.

7 Reasons Why Consumers Hesitate to Purchase Life Insurance (and the Reasons Why You Should)

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“I’ll worry about exploring my life insurance options tomorrow.”

How many times have you uttered or heard these words? When you’re busy or your budget is tight, it’s tempting to relegate life insurance to another day’s to-do list. We understand. But life insurance is probably one of the most critical investments you’ll ever make. It ensures your family is protected in the event of your untimely death. It can even afford you financial support, should you find yourself facing a critical illness. So, why do so many still choose to overlook it?

For today’s post, we’re sharing top reasons consumers put off purchasing life insurance and how comparison shopping with us can put your procrastination to rest.

1) I Don't Want to Think About Dying

The only thing certain in life is death. Still, it’s not something any of us care to think about. As adults, we’re confronted with issues we often choose to ignore. This never alleviates the problem, though. The most logical and responsible thing to do is face the issue head-on, make a decision, and shift your focus back to living. It doesn’t have to be a painful process. The Vista Life team can help you understand the coverage you need and comparison shop quickly and confidently.

2) It’s Complicated

We live in a society where virtually everything can be researched and purchased online. While life insurance is no exception, many consumers become intimidated and walk away, when they have to weigh their available options. Life insurance has a unique value that differs from person to person. It’s critical that you discuss your needs with an experienced professional that can offer guidance and support. Purchasing life insurance doesn’t have to be a daunting task, but it is an investment you want to take seriously.

3) Paralyzed by Fear

No one likes making the wrong decision, particularly when it’s costing them money. But not making a choice at all is the worst kind of decision. Your need for life insurance isn’t going to dissipate over time. In fact, it’s likely that it will grow. Doing so now will ensure your premiums are the lowest possible and that your family is protected in the event of your untimely death. And, while it’s not recommended, you can always cancel the policy later if you really feel you made the wrong decision.

4) Don’t Have Time

If you’re anything like me, you often feel there’s not enough time in the day to get everything done. Cross one thing off the to-do list and two more things get added. Purchasing a life policy doesn’t have to be a lengthy process. In fact, you can obtain comparison quotes through Vista Life in less time than it takes to fill up your tank at the gas station.

5) I’m in Great Health, Why Would I Need Life Insurance?

You just had a physical and got a clean bill of health. Congratulations! Unfortunately, there are no guarantees in life and your health is no exception. Remember, insurance protects our family against the unknown. Do you really want to gamble with your family’s future?

6) It’s Too Expensive

One of the top reasons why people fail to purchase a life insurance policy is cost. If budget restrictions are a concern for you, don’t give up hope. There are a multitude of affordable options available. Don’t allow this common myth hold you back from investing in your future.

7) I Have a Pre-Existing Condition, I Know I'll Be Denied

Many consumers work under the assumption that a medical diagnosis immediately makes them uninsurable. While a medical condition typically results in a higher premium, the underwriter considers your ability to control said condition which determines insurability and price. At Vista Life, we’ve made it our mission to find affordable coverage for every insurable risk.

Most people want to enjoy their life, particularly the fun times with friends and family. It is understandable that people shy away from thinking about the end of their lives. No one wants to think about leaving their friends and family before their time. Working with a qualified professional will allow for a seamless and painless life insurance process. Once you’ve made your final decision, you can rest easier at night and get back to living life to it’s fullest. At the end of the day, that’s all any of us really want.