Talking About Life Insurance: The Essentials

Why It Matters:

  • Talking about life insurance is difficult. Knowing how to bring up the right topics can help bring peace of mind.
  • Life insurance is about more than just you; it’s about looking out for your loved ones.
  • Talking about life insurance helps you and your family determine your life values, so you can work together to protect them.

Andy Bartosch tkc.profilePicture Written by: Andy Bartosch | Transamerica
Sept. 14, 2017

5 Min readClock Icon

Talking about life insurance can be difficult and…well…a little awkward. But once you get over the er’s, um’s, and ah’s that come with discussing the possibility of an unexpected passing, you can start having conversations that help grow your confidence in the future and allow you to focus on enjoying your life.

If you need a refresher on the nuts and bolts of life insurance, check out our article here. If not, keep reading to learn what you should be talking about when talking about life insurance.

Let’s get started.

1. Talk to your loved ones

You work hard to establish and maintain your quality of life. But why? Of course, you do it for your own enjoyment, but if you’re like most people, the thing that keeps you going are your loved ones. You want them to enjoy the fruits of your labor too. So, it only makes sense that discussing life insurance with your spouse, parents, siblings, and/or children (who are old enough for the conversation) is important.

Where to start:

If you’re married, it’s best to start with your spouse. Open up the topic of conversation. Get comfortable with discussing the possibility of an unexpected passing. If you aren’t married, talk with someone you trust: a friend, therapist, or sibling for example.

When to talk:

You should be talking about life insurance as soon as you have a person in your life whose financial standing or quality of life could be negatively affected by your passing. If you get married or have children, it’s time to talk.

What to talk about:

A financial professional may help you determine the exact amounts of coverage you need to cover future expenses for your family. But, you should be prepared for that conversation by getting a handle on your family’s current financial situation, and forecasted expenses. What are your debts? Credit card, auto loan, mortgage, etc. Do you plan on funding college for a child? What about day-to-day expenses like food, shelter, and clothing? For your family, this could mean more than basics; different families have different expectations and values for their day-to-day lives. What about funeral expenses? The average cost of a traditional funeral is $10,000, but is that the type of funeral you and your family want? This is the time to determine your values and priorities.

Overview:

Talking with your loved ones about life insurance is an ongoing conversation. It’s important to revisit the topic from time to time, not only as the people in your family change (new children, divorces, etc.) but also, as your family’s financial values and attitudes change.

2. Talk to your financial professional

This is where the rubber meets the road. Your trusted financial professional can help you make your life insurance purchasing decisions.

Where to start:

Begin by making an appointment. Ideally, you will already have done a bit of your own research into life insurance policies and at least started discussing life insurance with your loved ones.

When to talk:

ASAP. According to a Money Under 30 article, buying life insurance young (in your 20’s or 30’s) can save you thousands of dollars over time. Age and health are the two most important factors life insurance companies consider when setting your premium. As you age, you’re more likely to be charged a higher premium since you’re more likely to develop a chronic health problem that can bump up your premium or make it hard to get coverage in the first place. Even if you’re past your 30’s, the sooner you start shopping, the better chance you have of saving money.

What to talk about:

The most important topic of conversation should be about which type of policy is best for you. Do you want stable or variable premiums? Temporary or permanent coverage? Do you want the option to invest the cash value of your policy? Prepare for these conversations by learning about the different types of life insurance before you go.

Overview:

Your financial professional is armed with the latest knowledge on how to find the proper life insurance policy for you. That could help to give you the peace of mind that comes with knowing you have a life insurance policy that works well for you and your family.

3. Talk to your estate planning attorney

When you have a life insurance policy in place, the death benefit paid to your beneficiaries will be at least partially used to pay your bills. This could mean taxes on your estate, funeral expenses, and other outstanding debts in your name. In order for a loved one to access the cash needed to pay these bills, you may need an Estate Planning Attorney to make sure your paperwork aligns with your needs and wishes.

Where to start:

Get a recommendation for an estate planning attorney. Your financial professional, accountant, or previous legal counsel are all great places to get a recommendation.

When to talk:

During and after you’ve made a life insurance policy purchase. Estate planning is an ongoing process. As your financial situation changes, your family grows or shrinks, and your goals and values shift, you should update your estate plan to reflect those things.

What to talk about:

Work with your attorney to determine the needs of your estate. Who is your primary life insurance beneficiary? Should you have a revocable trust or an irrevocable trust? Should those named in your trust be primary or contingent beneficiaries? Will they have to pay an estate tax? What happens if you’re single? There are lots of important details to discuss and your attorney will help guide this conversation.

Overview:

If your loved ones begin collecting your death benefit, you want to make things easier for them. You want to limit the amount of time and money that it takes to get everything in proper order so they can get back to living their lives. After all, that’s why you get life insurance in the first place.

Things to Consider:

  • If you haven’t already, start talking about life insurance with your spouse or family. It’s rarely too early and it’s never too late.
  • Stay prepared – always keep track of your (or your family’s) debts and day-to-day expenses.
  • Keep your beneficiaries and trusts updated based on changes in your family and life.

PHOTO: TWENTY20.COM/CRIENE

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