Who Should I Name As My Life Insurance Beneficiary?

Naming a life insurance beneficiary is a big decision, but it boils down to one main question: Who would suffer financially if you were no longer here?

There isn't a single "right" answer, but there are a few standard paths depending on your situation, along with a couple of critical legal traps you'll want to avoid.

Common Options to Consider

• A Spouse or Partner: This is the most common choice. The payout is typically used to replace your income, pay off a mortgage, or cover daily living expenses for the surviving partner.

• Adult Children: If your kids are grown, naming them ensures they receive the financial support directly. You can split the benefit equally among them.

• An Aging Parent or Dependent Relative: If you provide financial care for a parent or a sibling with special needs, naming them can ensure their ongoing care is funded.

• A Trust: If you want to control how and when the money is spent (for example, keeping it in a trust until a child turns 25), you can name a legal trust as the beneficiary.

• A Business Partner: Often used in "Buy-Sell agreements," this allows a surviving partner the cash needed to buy out your share of a business from your heirs.

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Critical Traps to Avoid

1. Never Name Minor Children Directly

Insurance companies legally cannot write a check to a minor. If you name a young child, the court will get involved to appoint a guardian to manage the money until they turn 18 or 21. This process is expensive, slow, and stressful. Instead, name a trust or an adult custodian under the UTMA (Uniform Transfers to Minors Act).

2. Forgetting a "Contingent" Beneficiary

Always name a backup (contingent) beneficiary. If your primary beneficiary passes away before or at the same time as you, and you don't have a backup, the money defaults to your estate. This means it has to go through probate court, can be taxed, and can be claimed by creditors.

3. Naming Your "Estate"

It sounds like a safe catch-all, but naming your estate subjects the life insurance payout to the probate process. One of the best features of life insurance is that it usually bypasses probate and goes straight to your loved ones tax-free within weeks. Naming the estate ties that money up in court for months.

Don't Forget to Keep It Updated

Major life changes—like marriage, divorce, having a child, or starting a business—are a signal to review your policy. Keep in mind that a will does not override a life insurance policy. Whoever is named on that insurance document will get the money, regardless of what your will says.

Let us help you protect your family and your business. Click here to schedule a call. 

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. Please subscribe to this blog!

Children Love Life Insurance

When we think of things children want, it's usually a toy or some other "fun" item. And kids will get that item, play with it for a while and soon it becomes part of a pile of toys that sits in the corner, only to be played with occasionally. 

One thing that a child does love is stability. Not having to worry about bills and other "grown up" issues are what makes being a kid joyful. And when tragedy strikes life insurance offers that stability. Being able to stay in the same home, having the same routine and doing all the fun things that go with "growing up" like hanging out with the same friends and summer camp help a child tremendously.

And children know when there is stress, financial and otherwise, in the household. That stress can result in poor school performance, low self-esteem and other issues. Life insurance can alleviate much of that stress and lead to a much happier and adjusted child.

Kids don't love life insurance because of the paperwork and riders. They love it because of the promises kept. And that promise is that their home and future is non-negotiable. Make that promise to your kids with a life insurance policy.

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. Please subscribe to this blog!

Why You Shouldn't Wait To Buy Life Insurance in 2025

When it comes to life insurance, many people tend to put it off. They might think, "I'm young and healthy, I don't need that yet." However, delaying this important decision can cost you more in the long run.

Here's why buying life insurance when you're younger is a smart financial move:

1. Lower Premiums:

   • Healthier, Lower Risk: Younger individuals are generally healthier, making them less risky to insure.
   • Longer Life Expectancy: Insurance companies factor in your life expectancy when calculating premiums. A younger age means a longer projected lifespan, resulting in lower costs.

2. Locking in Rates:

   • Protection Against Future Rate Hikes: By purchasing a policy early, you lock in a fixed premium rate. This shields you from potential future rate increases due to age, health conditions, or economic factors. *

3. Peace of Mind:

   • Financial Security for Loved Ones: Knowing that your family is financially protected can provide immense peace of mind.
   • Legacy Planning: Life insurance can help you leave a legacy, ensuring your loved ones are taken care of, especially if you have dependents or significant debts.

4. Potential Tax Advantages:

   • Tax-Free Death Benefits: In many cases, the death benefit paid to your beneficiaries is tax-free, providing a significant financial boost.

Common Misconceptions:

• "I'll Buy It Later": Waiting can lead to higher premiums and potential health issues that could make you ineligible for coverage.
• "It's Too Expensive": While the cost varies, there are affordable options, especially for younger individuals.
• "I Don't Need It Yet": Even if you're single and childless, life insurance can protect your assets and cover final expenses.

Taking the First Step:

If you're considering life insurance, it's best to start early. Here's how to get started:

1. Consult a Licensed Agent: They can help you assess your needs and recommend suitable policies.
2. Shop Around: Compare quotes from different insurers to find the best deal. An independent agent is best suited for comparing policies. 
3. Understand Your Policy: Familiarize yourself with the terms, coverage, and limitations of your policy.
4. Review Regularly: As your life circumstances change, re-evaluate your coverage needs to ensure adequate protection.

By taking proactive steps to secure life insurance, you're making a wise investment in your future and the future of your loved ones.

*Depending on the type of coverage you purchase, you may be "locking in rates" for 10, 15 or 20 years, or even a lifetime!

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. Please subscribe to this blog!

One Bucket Or Two? - Another Long Term Care Option

When people are planning for retirement, one very important piece of the puzzle is often neglected. While thinking of once-in-a-lifetime trips and pickleball sound fun, long term care expenses have to be part of the equation. 

As mentioned in a previous post, the "no go years" happen when one's health deteriorates into a chronic illness. Caregivers are expensive in a facility and can cost even more to be in a client's home. In a short amount of time an entire retirement savings can be gone.

I like to say that people who buy Long Term Care insurance (LTCi) are "forward thinkers". And for many younger "forward thinkers", say under 40 years of age, it can be cost effective to look into a life insurance policy with "living benefits", which can be used for long term care expenses, instead of a traditional LTCi policy.  In other words, one could use their life insurance while they are still alive.

These types of policies come in different formats and pricing. Generally speaking, here are a few difference in these hybrid life/LTCi combo policies.

• Underwriting: Since the policy is a life insurance policy, the underwriting guidelines may be different. I've seen LTCi policies be declined, yet the client is approved for a life insurance policy. However, if the LTCi portion is a separate rider, it can be underwritten apart from the life insurance. 
• Benefit payments: Many of the policies with Chronic Illness riders or equivalent Living Benefits pay the benefits directly to the insured, but some with true LTCi benefits may require receipts for reimbursement. Check with you agent to find out which is best for your needs.

Traditionally, these "living benefits" were found exclusively on permanent life insurance policies, like whole or universal life. Recently we found a carrier who also offers a term life policy with the living benefits included. 

There is one important part of this combo life insurance/LTCi piece that needs to be covered. Generally speaking, if you decide to purchase one of these products, be aware that if you become chronically ill and need the benefits to cover the cost of your care, you may exhaust your life insurance benefits which could be of use to your survivors when you die.

This is where the buckets come in. Many of these policies have one bucket of money, and like stated above, can be used for either life insurance or long term care expenses, but not both. (I have seen a version that keeps a small amount of life insurance aside, say $10,000). 

On the other hand, there are also policies with two buckets of money, with each being able to pay out. For example, let's say you have a $100,000 policy and have a stroke. You can use up to the $100,000 for your care until that bucket is empty. If you should die, the second bucket is still full for your life insurance needs. 

The "two bucket" policy can cost more, and that is because of the potential for paying out twice (once for your chronic illness, again at your death). 

Let's try another example of the same $100,000 policy, but change things up a bit. Again, you have a stroke, but after using half of the money, $50,000, you pass away. At that point the life insurance bucket pays out it's $100,000, so the total payout is $150,000.

When I talk to clients about LTCi one objection is raised far more than others. "What if I die before I need it?" It's a reasonable question, because LTCi can be expensive and if someone were to suddenly pass away, the premiums would be for nought. However, with a combo plan, it will still pay out the death amount, so nothing is "wasted". 

Also, traditional LTCi policies have a claus that states that the insurance carrier has the right to raise the premiums of policies that are in force if they need to. This happened after the Great Recession of 2008. The insurance companies had invested heavily into the stock market, and when the market dropped so did the amount of money on hand needed to pay claims. Several companies raised premiums 15-20%, with at least one carrier going for a second premium rate hike not long after the first. With life insurance, your rate is locked in.

Combo products can be a useful part of an insurance plan for a lot of people but make sure you ask your agent or insurance broker about your options and how it will pay if you need it.

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!

Do You Have A Rainy Day Fund?

We often hear about people who need funds in an emergency. Someone who has a medical emergency, for example, may need some quick cash for hospital bills, deductibles, co-pays. Along with that could be a shortage of money to pay bills while out of work. 

A general rule of thumb has been to make sure you have six months of money saved to pay bills, but many rarely do this. The solution has been to wait until an emergency occurs, then start a GoFundMe page and ask friends or family (or even strangers) to contribute. People who know I sell insurance will ask me "Why didn't you sell that person some insurance?"  My answer is "I tried but they didn't find it important enough at the time."

However, if one owns a permanent life insurance policy that builds cash value, asking friends and strangers to kick in doesn't have to happen. And by overfunding a policy*, building that cash value can happen faster. 

I knew of a gentleman who had quickly built a small fortune in a life insurance policy and would "warehouse" his money until he needed it. If he saw a piece of property he wanted to purchase he would call the insurance carrier and "borrow" against his policy, and within 6-8 months he would have the loan paid off. By using this method he avoided having to fill out loads of paperwork at a bank and, in most cases, he would have the money within a few business days.

The point of this is that life insurance that builds cash value can be used for emergencies, like a critical illness, or many other things. If you have questions about how this works, visit our site and book a short phone appointment to discuss. In the meantime, please stay healthy. 

*There are limits as to how much one can contribute to a policy which are set by the IRS. Tax penalties can apply if the policy isn't structured correctly.

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!

How Can I Use Life Insurance To Fund College Tuition Costs? 2023

During a discussion with a friend of mine, whom I'll call Bob, we talked about paying for his child's education costs if and when he went off to college. Bob had been divorced a couple of years and his son was in first grade at the time of our conversation. 

Bob has his own business and does pretty well financially, but he isn't a millionaire by any stretch of the imagination. He told me that he hoped that his son would get some sort of scholarships down the road, but due to his above average income, the child probably wouldn't be eligible for any financial aid when the time came. I agreed with him on this point. 

One of the first things we did was run an estimate* of how much a four year college would cost 12 years out. When I say "estimate", it truly is just that, because there are so many variables like the following:

• Will the child go to a public or private college?
• Will the school be in state or out of state?
• What if the child decides to get an associates degree at a 2-year school?
• What if the child doesn't go to school at all?
  
  
  

These are important things to think about because of the nature of our current college savings plans. Most of these plans, like the 529 or Coverdell plans, give tax breaks for setting aside money for college. And as most things that are "tax related" go, there is going to be plenty of paperwork and documentation involved. That means Bob and his child would have to disclose any college savings plans and the amount of cash accrued inside those plans. 

During this discussion I asked Bob if he had any life insurance, which he did. He had a term life policy that covered the mortgage on his house and his ex-wife was the beneficiary due to the court determining this at the time of their divorce. 

This is when I brought up using life insurance as a college savings plan. The reason I like to consider this is because it takes care of two problems at once. First, Bob needed additional life insurance as his term policy was not enough cover the cost of college for his son if he were to die too soon. Secondly, the cash value inside the policy would not need to be disclosed on any financial aid applications.

He agreed to look at some numbers. We had planned on taking money out of the policy during his son's freshman year, but a phone call gave us another strategy. My friend at the insurance company suggested a strategy where Bob's son apply for college loans. Since the loans wouldn't be due until he graduated, he could pay them back then with little to no interest in full. By waiting until the child was out of college to repay the loans, the cash value would have an additional four years to build cash value. 

Because Bob was healthy and an non-smoker, he was able to get more "bang for his buck" out of the policy. After some consideration, Bob and I agreed that the best way forward was to use an indexed universal life insurance plan, as a whole life plan would cost more and not build cash value as quickly. 

Another reason we liked the plan was that if the child, for some reason, didn't need the money, Bob could use the cash value to supplement his own retirement or take advantage of the living benefits** if he were to become chronically ill. 

If you have questions regarding using life insurance while you are living, drop us a note. In the meantime, please stay healthy!

*There are many calculators out there that can help you estimate the future costs of your child's education. We recommend this one.

**Living benefits are not available on all plans but were included at no extra charge in this case.

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! 

Let's Keep Your Private Information Private

Last week, while on a work trip in Virginia, I saw a commercial on TV for life insurance. You more than likely have seen these ads as well. 

"Bob, 45, just got $2 million life insurance policy for $10 a month! Let us help you!" the voice over guy screams. A blur of fine print flashes across the screen. I'm not sure if I read it all correctly, but it implied that Bob got super ultra preferred rates because he runs marathons daily and is 4% body fat. In essence, Bob will never die.

I'm exaggerating a bit, but you get the point. The ad shows the best case scenario, but we all know that if we could have read the rest of that blur of words, it would also mention that all rates are subject to underwriting and your premium could differ. 

These ads are for insurance agencies which represent multiple companies. When someone goes online and looks for a quote, the agency gathers your information. But what does it do with that information, like your date of birth and email address? That information is sold to an insurance agent who has purchased that lead. 

Here is where things get weird. Many insurance agents will purchase leads. They think it will be worth the cost to avoid having to prospect for clients or advertise. Personally, I have never had much luck with leads of any kind. 

I used to work with a life agent, who we will call Pete. Pete paid a service approximately $300 for a year's worth of leads. Part of this deal was that Pete could choose up to three zip codes, and if the leads were in those zip codes, the agency would email him the prospects information. The problem was that there could several agents signed up for the same zip code, and they would each get an email.

According to Pete, he needed to wake up early enough to get the email and be the first agent to call the prospect. If he was too late, even by a few minutes, the poor prospect, who didn't understand what was going on, would yell at him. "I was looking at life insurance in the middle of night because I couldn't sleep. I didn't realize I was going to get five agents calling me!"

Pete also told me that most of these leads were from people who were "kicking the tires" to see how much insurance would cost and had no intention of actually buying a policy. And if they did, the premiums would be so low that his commissions would never make up for the $300 he paid for this "service". 

We do things a bit differently. If you go to our website, we also have all of the big name insurance companies, and our site compares rates as well. And, yes, we do gather your information as well. But that is where any similarities end. 

If someone likes a quote on our site, they can start an application. We don't sell data to agents. We will contact prospects to let them know we are available if they have questions or if the insurance carrier has any underwriting questions. And if someone would like to speak with an agent, they can always contact us.

Everyone is trying to stay within a budget, even when it comes to making sure that their family can stay in their own home if tragedy should strike. But one should make sure they are purchasing the amount they need as well. Our quoting engine has a calculator to help find out how much coverage is needed, which is important. Too often people don't apply for enough coverage. 

Do you know someone who needs a little more life insurance? Pass along our website and help them protect their family's financial future.

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!