Why Life Insurance Is Necessary For Blended Families

As the holidays approach, the idea of taking care of our family means more to us. Having our loved ones get together for a nice meal and gift giving leaves us with great memories. 

However, when we think of the "traditional family" we think of a husband and wife and their two or three children, who all live together in one home until the kids become adults and move out. Even though there are still families in this situation, there are many people who have changed that concept. With social norms changing and people living longer, the family structure has been altered dramatically. 

Now we have parents raising children who are not theirs, biologically speaking. Think of the old Brady Bunch TV show where two parents who had their own kids remarried. Of course, on the show everything was great. The fact that Marcia was not Mike Brady's biological daughter was never brought up as a topic. 

There are those people who do love their step-kids or other children who have been brought into the home, like nieces and nephews . I know of one person in particular who is raising his wife's nephew because his sister-in-law had a drug problem. 

There are those who begrudgingly raise a spouse's children from a previous relationship to "keep the peace". And when problems arise, the kids want to move back to their other biological parent or some other option. In other words, tensions can, and in some cases, do get escalated to the point where children are going back and forth between parents or other adult family members. 

With all of this in mind, it's important to keep an even keel when it comes to estate planning with a blended family as it creates a whole set of issues. A will may seem like a good way of planning, but in fact, life insurance could be a better option to make sure those who are intended to benefit will be taken care of in the eventual death of a parent. And in the flexibility of naming and changing beneficiaries, as well as listing primary and contingent beneficiaries, makes it incredibly easy to take care of the family's estate planning needs. 

As an attorney friend of mine says, "A life insurance policy trumps a will because it's a legally binding contract." The "yours, mine and ours" scenario can be very confusing for most families when it comes to estate planning, and life insurance can be the answer that is needed. It can help avoid a long and drawn out estate process and keep the peace within a family. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

I Sell Money

When I first got into the insurance business I didn't have a mentor or anyone to "show me the ropes" per se. I learned quickly that my sales manager had a financial interest in me selling, and one would think that he would want me, as well as the rest of the agents on his team, to succeed. And while it was true to an extent, I also learned that I needed a mentor who did not have any skin in the game when it came to my success. Basically I needed someone who could be objective and give me sound advice who would be looking out for my interests.

Since no one was stepping up to the plate to help me, I started reading books about sales and any information I could find about successful insurance agents. There were many motivational books and most of them gave the same basic information. One day, I came across an article about an agent who was deemed "The Greatest Life Insurance Agent of All Time". His name was Ben Feldman and his story was quite remarkable. 

I don't want to bore you with all of the details as you can look up the details on him with a simple Google search, but the simple fact is that he found a way to sell more life insurance as an agent than some entire companies at the time. When asked how he sold so many insurance policies he said, "I do not sell life insurance. I sell money."

You see, Mr. Feldman was able to clearly communicate what life insurance is. When a client buys a policy, they are actually buying a promise. That promise is that if the insured should die, the insurance company will pay a death claim which will exceed what the client has paid in. 

Mr. Feldman also was noted as saying to his agents, "Don't sell life insurance. Sell what life insurance can do." In today's world of life insurance, a policy can do a lot for a family when the insured passes away, but with all of the living benefits available nowadays, people can use them while they are still living. 

Let's face it, no one really wants to buy life insurance, or any other kind of insurance for that matter. It's not fun or something one can show off to their friends. But it is necessary, especially when others are dependent on us financially. Our children rely on us to provide housing and education, which costs money. Our parents, who always insists that they don't want to be a burden on anyone else, may ultimately rely on us to help with long term care costs if they haven't planned in advance.

And then there are others that may depend on us financially, like charities and churches. When a large donor passes away, that non-profit organization may need to find other donors to fill the missing gaps. And sometimes, those large donors will list the charity of their choice as a beneficiary on a policy.

Ben Feldman knew all of this and made sure he didn't sell just the steak, but the sizzle as well. Instead of saying he was selling life insurance, he would call it something like "a special educational package for your children's children."

So the next time you talk to a life insurance agent, remember, we don't just sell insurance, but we sell money, and a promise. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Life Insurance Beneficiaries Made Easy

I received a phone call recently from a friend (I'll call her Molly) who lives in another town. She said she had some questions pertaining to life insurance beneficiaries, specifically for her mother and brother's policies. 

Without going into a lot of detail, she explained that her mother, who was in her early 90's, was starting to have some health issues. "Mom" had a couple of small life insurance policies she had purchased years earlier and Molly had questions about the beneficiaries and how the policies paid out the death benefits. 

The wrinkle in all of this was that Molly's brother (we'll call him Dan), was listed as a beneficiary and he is currently in hospice with his own health problems. Molly didn't seem to think that Dan was going to last much longer, thus confusing things further. And just to make things even more complicated, the mother had taken out a policy on Dan when he was a child, with the mother listed as the beneficiary. What a mess!

Molly wanted to know who would get the death benefits if either her mom or brother died first. I suggested we discuss one at a time. Since her mother owned the life insurance policy on Dan, the mother could call the insurance carrier at any time and change the beneficiaries. I suggested that Molly help her mom contact the company and request a form, either called a "change of beneficiary"  or "beneficiary update" form, and get it completed as to her wishes as soon as possible. 

Many times the company will be happy to email (or snail mail) the form to the owner of a policy, but most require a "wet" signature to make changes. Digital beneficiary changes are rarely accepted. The nice part is that an owner of a policy can do this is at any time.

Molly also had questions pertaining to the policy on her brother. Even though Dan was not expected to make it much longer, what would happen if the mother died first? There were no other beneficiaries listed, according to Molly. 

Even though her brother was the insured, he had no real rights to make changes since he was not the owner of the policy. Again, the mother was in control. My suggestion to Molly was to get additional changes forms to update the beneficiaries on the policy insuring her brother. Her mother could add Molly as a "contingent" or "secondary" beneficiary. 

All of this is why we emphasize checking your policies from time to time and making sure your beneficiaries are correct. Updating this information can avoid a lot of headaches for your loved ones. 

Just so you know, beneficiaries can be prioritized, i.e. Primary, secondary (or contingent). In other words, if your primary beneficiary dies before you do, or at the same time, your secondary beneficiary would receive the funds. 

However, some people choose to split up their beneficiaries. A parent may want two people to share equally. When this happens, they can both be named as primary beneficiaries, but each receiving 50% of the death benefit. 

I try to convince my clients to keep things as easy as possible. Naming beneficiaries in order instead of dividing up things can be more helpful, especially when it comes to paying down debts, like mortgages and other bills. Also, as in the case of Molly's family, some beneficiaries may pass away before the insured. 

Another thing to consider is that children under 18 years of age should not be listed, as the insurance company will not send money to a minor. Many of our clients who are single parents tend to name other family members who will put the money aside for the child until they are responsible. 

Please keep your beneficiaries up to date and if you have questions, drop us a note.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient, and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! 

Who Brings Your Family Money When You Die?

Last year when my father passed away, I found myself as the executor of his estate with many responsibilities. In addition to finding a realtor to handle the sale of my father's home and hiring contractors of various sorts for quotes and repairs, I was also on the hook for making sure bills got paid. Where was that money supposed to come from?

Unfortunately for me, my father had not updated the beneficiaries on any of his life insurance policies in over 40 years, which is insane and downright criminal. All of his named beneficiaries has died way before him, including my mother who had died nine years earlier. That left us creating his estate's bank account with the little cash that was in his checking account and waiting a few months for the policies to pay to the estate instead of his heirs. 

In that time, I realized that when someone dies there are a lot of people with their hands out wanting money. Here are a few: 

1. Contractors. As previously mentioned, we had to figure in the cost of repairs and upgrades to the house. Some we dealt with and others we passed along to the prospective buyers because they were just too much for us to afford.
2. Attorneys. Our attorney let us know from the beginning of the process what the estimated bill will be at closing, so I have to make sure that money is on hand when we need it.
3. Accountants. Be prepared to pay someone to handle your deceased loved one's tax preparation for up to 2 years (if they died before filing the previous years taxes plus the preparation of tax forms for the years in which they died), plus possible estate taxes. 
4. Funeral costs. I've mentioned before how my father pre-planned his funeral but didn't pre-pay. In other words he made a wish list. Inflation took it's toll from the time he chose his casket to when he would actually use it. 
5. Lien holders. This was one I didn't expect but a deceased person still may have debts to be paid off. My father was taking money from a Home Equity Line of Credit (HELOC) which we were unaware of until his death. We settled up with the bank after the sale of the house but I can imagine other people have all kinds of debts that need to be taken care of with cash.
   

Of course with everyone coming forward and asking for money was stressful, however the one bringing us money to take care of these things was the insurance company. When all the others have their hands out, one is bring the much needed check. 

Think about your family for a minute and consider them being in a situation like that. Having to handle funeral directors, lawyers and other bill directors while grieving is a tough situation to put them in. You can avoid it by making sure you have enough life insurance available for them to handle easily and without going into debt or needing a GoFundMe page. 

To help you determine how much life insurance coverage you need, we have included on our quoting software a calculator. It asks for numbers regarding your debts, including mortgage, as well as how much savings you have put aside. You may find out that you don't need as much as you previously thought.  

If you have questions about making sure your life insurance will ease the burdens on your loved ones drop us a note. In the meantime, please stay healthy! 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Why Should I Update My Beneficiaries?

As I mentioned a few weeks back, updating your beneficiaries on your policies is an important part of owning life insurance. How often you should do these updates is up to you, but in a perfect world we would have a reminder.

When we change our clocks those two nights of the year, we're also reminded to check the batteries in our smoke detectors. What a great way to take care of the important task that could save the lives of your loved ones. And doing the "maintenance" on your life insurance policy is just as important to your family.

I recommend you pick a day, say Independence Day for instance, to review your life policies. By taking a few minutes you may realize that your the person you originally chose to get your death benefit is no longer in the picture. As our lives change from marriage, divorce and death, so do the people and situations that can impact your family upon your death.

My father passed away last year and we eventually found a few life policies. Unfortunately, none of the beneficiaries were up to date, leaving us in a position where the insurance company had to  pay the benefits into my dad's estate, instead of paying directly to his heirs.

One of the advantages of life insurance over leaving directives in a will is that the policy is a contract in the eyes of the law, thus taking precedent over a will. However, if the beneficiaries have predeceased the insured, you may have to wait for those proceeds.

While checking your life insurance policies, you may as well check all of your other policies as well. Many non-life policies also have beneficiaries that you may have forgotten about. Have a cancer plan through work? It's probably got a beneficiary. These types of policies, called worksite, voluntary or ancillary products, pay you a benefit directly, but if you die in the middle of medical treatments, the policy will pay any leftover proceeds to whomever you name.

I had a client in North Carolina who was in an accident and was eligible for benefits as he was in the hospital. Unfortunately he died a few days later and his family didn't realize there was an accidental death benefit until I mentioned it to them. The policy also paid his beneficiary for the other benefits while he was receiving treatment.

Just like you do maintenance on your car or home, take the time to do a quick check up on your policies, or ask us to take a look at them for you with no obligation. In the meantime, please stay healthy.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!