Talking to family about your insurance policy
Published on Fri Nov 23 2018 in Family
For many people, arranging insurance cover is something that they manage to tick off their to-do list. However, there may be one thing they forgot to do when they took out cover: talk to their family about it!
Life and funeral insurance can often be viewed as mysterious and complicated — feelings that are sometimes even held by those who will receive the benefit. Luckily, having a conversation with your family or beneficiaries about your policy might help clear up some of this confusion.
Why is this important?
Telling your family that you have either life or funeral insurance could be important for one practical reason: if they don’t know you have a policy, they won’t know to make a claim!
When someone passes away, money is often needed right away to pay funeral costs or settle any final debts. There are also all those everyday bills that would still need to be paid—from the mortgage and car payment, to utilities and groceries. If your loved ones are not aware that you have an insurance policy, they may be left out of pocket for these expenses or might struggle to make ends meet.
What else will your family need to know?
Knowing that you have a life or funeral insurance policy is just the beginning. There are other parts of your cover that may be important to talk to your beneficiaries about as well, like:
- Does your policy have any exclusions?
Often, families don’t realise that there are times when a claim won’t be paid. They may not think to read the policy wording (or be able to find it) before making a claim. This can understandably cause disappointment or frustration if their claim is not paid. Having a conversation about exclusions with your family now could help them to avoid this in the future. - Does your policy ever expire?
Depending on the type of policy you have, your cover may end once you reach a certain age. After that time, your family will no longer be able to make a claim. Similar to exclusions, letting your loved ones know if your policy has an “expiration date” could help them avoid the hassle or frustration of attempting a claim after the policy has ended. - How do they make a claim?
Your beneficiaries have checked the policy wording and are good to submit a claim—now what? Giving them an idea of what the claims process is like (including which documents they’ll need to provide) could help everything go a bit more smoothly. We’ve written about making a claim before, so you can send them a link to that article. But of course, your family are always welcome to call Customer Care for help, too!
Is there anything else I can do now to help?
Besides talking to your family or beneficiaries about your life or funeral insurance policy, you may want to take other steps to help make things a little easier for them.
- Keep your policy up to date.
Your policy will be cancelled if the premiums are not paid. If this happens, your beneficiaries won’t be able to make a claim. Setting up direct debit or updating your bank card details could help prevent missed payments. - Store your policy documents in a safe place.
Keeping your policy wording and current policy schedule in a safe spot (or with a trusted person), could make it easier for your family to find the information they need when the time comes. This could be in a safety deposit box, filing cabinet or with your solicitor or accountant. - Leave instructions in your Will.
You may not feel comfortable discussing all the details of your policy with your family, such as who you’ve chosen as a beneficiary and how much each person gets. If so, you can include your policy number and instructions for your executor(s) to start the process in your Will.
Talking to your family about your cover could help clear up any misunderstandings they might have about the policy now, without the stress that grief sometimes brings. That way, when the time comes, they’ll hopefully have a better understanding of what is to come.
About Author: Momentum Life is a leading provider of Life insurance and Funeral insurance in New Zealand.
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The content provided in this article is for information purposes only. The information is of a general nature and does not constitute financial advice or other professional advice. To the extent that any of the content constitutes financial advice, it is limited to Momentum Life products only and does not consider your specific financial needs or goals. You should consider whether the information is appropriate for you and seek independent professional advice, if required.
All product information is correct at the time this article was published. For current product information, please visit the Momentum Life website.