Congratulations! You've purchased a life insurance policy. In doing so, you're providing a cushion of financial support for your spouse or partner and your children or other heirs. If something should happen to you, they'll be protected to the limits of your policy through the life insurance claims process.
Purchasing a life insurance policy is just the first step in establishing a robust financial plan for your family. Your life insurance policy purchase is one way to handle the consequences of your death, especially if people rely on you. Let's consider some of the other tasks you'll need to take care of after you purchase life insurance.
Your policy is only valid if you continue to pay the premiums (unless you have a permanent policy where the premiums are paid out of the policy's cash value). If you were to fall behind on payments, you risk losing the policy.
One solution is to set up a payment plan with your bank or the insurer to have money deducted from your account monthly or quarterly, depending on how you wish to pay the premiums. Most banks allow for online payments, so you don't have to remember to sit down every month for life insurance document management with your regular payment.
Once you've finished purchasing a life insurance policy and setting up a payment plan, your next call should be to your financial advisor, if you have one. This is the person you've charged with helping you shape a comprehensive financial plan that will reap benefits for you and your family.
Since purchasing a policy is a big step that will become an integral part of that plan, your advisor should know about it so they can factor it into your overall strategy. It may trigger changes to some of your other financial investments, for example, to maximize your ability to benefit from your income and investments.
After you purchase a life insurance policy, the next logical step is to consider your will. While lawyers have traditionally written wills, often at a high cost, you can now write a will on your own, using an online resource. Ethos offers simple estate planning tools to make creating these documents easier.
Life insurance isn't something you should "set and forget." There are many reasons to do a review of your policy annually. Consider, for example, that your beneficiary information may change: perhaps you have another child, or one of your beneficiaries passes away. In that case, you'll want to update the policy documents. You may also want to increase your coverage if your family expands.
You may be able to bump up the amount of coverage you have with little life insurance document processing. Some permanent policies also feature adjustable premiums, so you can update those, if needed.
When you purchase a life insurance policy, it's also a great time to choose someone (or possibly, multiple people) to become your children's guardian if you were to pass away. This is particularly true for single-parent households, but all families should have legal documentation that indicates where their children will live and who will be responsible for them if their parents aren't around. At the same time, as you're naming guardians for your children, also consider naming an executor for your estate.
Purchasing a life insurance policy may be the best thing you've ever done for your family. And you can do even more for them by following through with our suggestions for steps you can take after you've signed your policy documents. Creating a robust estate plan will ensure that no matter what happens, your family will be able to continue with their lives no matter what happens to you.