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When to Discuss About Life Insurance with Your Family?

Last modified: 20 Feb 2013

Why Purchase Life Insurance Plans?

You should purchase a life cover if you are interested in helping your family survive the loss of a loved one. Term life covers can ensure that your loved ones get financial support from the insurer when a claim is filed and this money can ensure that your children go to a good school or college, your spouse is self reliant and your elderly parents are taken care of when they are too old to fend for themselves.

Income protection insurance plans can ensure that both you and your family get financial help from the chosen insurer if in case you are too ill to work or are injured and need a few days or weeks off from your work. Total permanent disability plans, critical illness or trauma insurance plans and personal accident insurance plans all have their own purposes as well and can help both the policy holder and his family get adequate financial support from the insurer when they are injured or ill. Personal life covers can protect you and your family at all times especially when you have a need and have nowhere else to turn to.

 

Why Discuss About Life Insurance with Your Family?

Most families believe that taking out a life cover is not a good idea since they believe that nothing bad will happen to their loved ones. While it is every parent’s aim to protect their child, parents cannot assure their children that they will be with them forever. In such a situation life covers can ensure that families with younger children are taken care of and have enough money to build their own future. It is a must to discuss about your life insurance plan with your family because doing so will help them understand the importance of this type of insurance plan.

Discussing about the selected life cover or the purchased life cover can also help families avoid problems later on when it is time to file a claim. If needed, then buyers and policy holders should discuss about the taxation rules in brief with their beneficiaries when they purchase a plan. Since taxation of insurance plans is a length topic and can be confusing for most people, giving your family the name and number of a tax expert in case of emergencies can help them in the long run.

Remember, the point of discussing or sharing information about your policy, with your family is to educate them not to confuse them.Hence, policy holders should make it a point to keep things simple while sharing information with their loved ones. Sharing too many details can be overwhelming for some people; hence policy holders may want to share only important information at first.

Using simple floor charts or other teaching aids can help younger children understand the importance of taking insurance. Using these teaching aids can also help younger children understand how insurance plans work and what are the various benefits of taking that particular plan.

 

Before Taking the Cover

Before taking a term life cover or an income insurance plan, it is important for people with families and dependants to discuss with their families about how much cover to take out, which type of plan to purchase and the procedure for filing a claim in case the policy holder passes away.  If your policy has a waiting period, benefit period, restrictions, exclusions or any other specific terms then your family should be made aware about these terms as well.

The product disclosure statement not only contains details about your policy but also provides you with a fee structure in case of premium loading fees. There are many reasons why these things should be discussed with family members and these reasons include, taking their input, to ask for their opinions and to inform them of your decision of taking a life insurance plan. Since many families do not like the idea of purchasing a life insurance plan, it is important for the buyer to explain to his family why taking a life cover is a must and how life insurance can help them.

Families should be made to understand that taking a term life cover plan is not a bad thing and this type of plan can help dependants out when the primary bread winner of the family passes away. Discussing about a few potential insurers and a few selected plans can also help you and your family understand the pros and cons of each plans. discussing information relevant to the policy may also be able to help you save money; if your family wants to help you compare and purchase a plan together.

 

After taking the Cover

After taking the cover, it is a must for the policy holder to explain to the beneficiaries the detailed procedure of filing a claim. The policy holder should also make it a point to inform the beneficiaries of the rules, terms, eligibility criteria and any other important information relevant to the policy. The policy holder should also inform his family about the cover limit, additional benefits if any and the taxation aspect of these plans. if needed, then the family can be shown the policy and they can review the policy together.

While policy holders must review their life insurance plan at least once a year, beneficiaries should also be encouraged to review the terms with the policy holder so that the beneficiaries can understand the changes made to the policy and how they affect the policy. After purchasing a policy, the policy holder should also discuss other relevant details with his family and these details include the importance of disclosing relevant information to the insurer and the importance of paying premiums on time.

Other information that may be shared with the family includes the latest list of beneficiaries and the amount each beneficiary will get from the insurer. this information should be shared only if the policy holder chooses to disclose this information.

 

 

 

 

 



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